Demand for Information Is Driving
Data Center Building Boom
There goes the neighborhood.
Orange County’s burgeoning information economy, a flood of upstart telecommunications firms and cramped real estate in other parts of Southern California are luring a new class of building tenants.
Data centers,a term that includes anything from a stack of Internet routers to a roomful of Web servers,are flocking to Orange County to meet the growing demand for Internet and data services here.
More than 10 telecommunications and Internet service companies have secured space to house their local data operations since January. They range from Denver-based Web hosting firm Inflow to Time Warner Telecom, the services arm of the media powerhouse.
Compare that with virtually no new facilities in all of 1999.
“I’ve been a little surprised by the sudden increase in activity,” said Jason Shepard, a senior associate with commercial real estate broker CB Richard Ellis who specializes in so-called smart buildings. “It’s come in a large wave and it’s not going away.”
Areas attracting the most activity include the Irvine Spectrum, Parker Properties’ Summit Office Campus in Aliso Viejo and even the older Irvine Business Complex near John Wayne Airport, which seems to be attracting the most interest. Data centers also have popped up in Orange, Anaheim and other parts of the county.
Ongoing Interest
A year ago, Shepherd wasn’t doing any business with telecommunications companies. His first attempt at a deal fizzled in November. But two months later, he brokered his first data center deal and the action hasn’t let up since, he said.
Shepard said that he’s seeing more activity in the Irvine Business Complex, which had lost some prominence in the wake of headline-grabbing developments such as the tech-heavy Spectrum and the newer Summit.
Though the Irvine Business Complex isn’t known as Orange County’s technology nexus, more than a dozen telecommunications companies serve the area, making the area attractive to property owners and tenants who want a choice among providers. Santa Clara-based Exodus Communications Inc. is building a 110,000-square-foot data center with office space on Gillette Avenue in the Irvine Business Complex.
The abundance of high-capacity fiber-optic lines also mitigates the chances of losing a connection because of a single line being cut.
At the same time, the complex has a big concentration of high-rise buildings, prized by telecom providers because they’re cheaper to service and bring in more customers.
OC Gaining Popularity
Shepard said more telecom firms are casting their gaze on Orange County as Los Angeles and San Diego run out of prime real estate.
Despite troubles among dot-com companies, new businesses are popping up everywhere, while most traditional businesses are incorporating online technology into their operations. That creates a need for the telecommunications providers and Web-hosting firms that have made Orange County their home in recent months.
“The bias and reputation are obviously for Silicon Valley, but this area is becoming the ‘Tech Coast’ for a reason,” said Jerry Grasso, spokesman for Epoch Internet Inc., a Costa Mesa Web hosting company. “You can drive up and down the 405 (freeway) and see dot-coms all over the sides of buildings.”
Data centers are a different type of occupant than, say, an accounting firm or law office. While the computer-dominated facilities don’t require things like parking spaces or fancy office accoutrements, they do need a reliable flow of electricity,lots of it,and structural support for the heavy, densely packed computer gear.
And although machines don’t care about intangibles like the look and feel of a neighborhood, the customers they serve usually do, which draws the telecom firms to areas such as Newport Beach, the Spectrum and the Summit.
It doesn’t appear that the trend will be slowing any time soon. According to market researcher Forrester Research Inc., Web hosting will reach $19.8 billion in annual sales by 2004, compared with $1.4 billion last year. And telecommunications service providers are expected to boom, especially as more players enter the local phone market.
The recent volatility among Internet companies has Shepard asking more questions of potential clients. But he calls his choice to focus on the sector the best bet of his career.
“Dot-coms may come and go, but the information infrastructure needs are always going to be there,” he said.
