The Future of the Data Center Industry

David Horowitz, the SVP and Director of Sales at T5 Data Centers, joins us for a conversation about the Chicago data center market. David walks us through the Chicago market's current challenges and opportunities, and what he sees on the horizon for T5 and the industry as a whole. T5 and the Chicago Market Suburban Chicago has been nurturing a growing data center market for years, and thanks to the presence of players like T5 in the Chicago suburb of Elk Grove Village, the Chicago market is now one of the top in the country. Horowitz says it was around 2007 that data center providers started buying facilities, land sites, and industrial buildings in the area. Early entrants like Exodus and CenturyLink helped create the fiber-rich environment that exists today, and significant investment from local utility provider ComEd brought the necessary power and utility infrastructure for Elk Grove Village to boom. With connectivity to downtown Chicago, Elk Grove Village has become the heart of the city’s suburban market. By Horowitz’s estimation, there are roughly a million and a half square feet of data center product in the area, all within a 1.5-mile radius. Giving Customers What They Want T5’s success in Chicago and elsewhere is owed to their guiding ethos of putting customers’ needs first. According to Horowitz, the company has learned a lot of lessons through trial and error, but the most significant learnings have come from paying attention to customers — and responding to what they have to say. Business development has come as a byproduct of simply supporting clients with growing requirements and adapting services to meet customer demand. “We operate the best data centers, “ Horowitz says, “because [our customers] tell us we do.” Dealing with Uncertainty One current challenge Horowitz sees for T5, however, is lease renewal. Transactions from eight to ten years ago are coming up for renewal, and many of those customers have a much different perspective on their utilization rates now than when those agreements were signed. On top of that, migration costs aren’t nearly what they used to be. It’s now much easier to relocate than in the past, and Horowitz says many more customers are shopping around. “There's a lot of uncertainty about how customers are going to treat lease expirations,” he says. But he’s excited about the possibilities that could bring, particularly with build-to-suit opportunities in health care, finance, and with hyperscale users. What’s on the Horizon? It’s an exciting time for the data center industry, and Horowitz sees big things coming down the pike. First, there’s an environmental impact. “Data centers are impactful on the environment,” he says. And T5 is making a big investment in solar panels to support its goals for positive impact. “Sustainability initiatives [are] huge for us,” Horowitz says, not just for T5 internally, but for helping customers achieve their own goals for sustainability as well. Thinking about the next 15 years, Horowitz dreams of helping the world’s top 100 companies execute build-to-suit properties, landing government contracts, and expanding T5’s business internationally. On the build-to-suit front, Horowitz sees T5 as a collaborative partner, helping with site selection and development — whether they end up owning the facility or handing off keys once the shell is built. The federal government space is also one where Horowitz thinks T5 could support growth from a facility management perspective. For the data center industry as a whole, Horowitz says the best is yet to come. “A couple years ago, people said it was in the second inning. I still think it’s in the second inning,” he says.