Houston-Area Data Center
Data center operators in the Houston area say demand has been strong to start the year. Despite the challenging business climate during 2020, Dallas-based Skybox Datacenters, which operates a data center on 20 acres of land in Katy, saw its strongest growth year for leasing last year. Rob Morris, CEO at Skybox, said the company didn’t see much of a slowdown impacted by the oil and gas industry. While some sectors pulled back during the pandemic, many accelerated their adoption of technology and data center services amid the shift to remote work.
“A lot of that [demand] was driven by work from home requirements, as well as high performance computing requirements across the sector,” Morris said.
A slump in demand during the pandemic caused data center service providers to lower prices to compete for users, JLL noted in its report. Bryan Bennett, president and CEO of Houston-based consulting firm Bennett Data Solutions, said 2020 really was a buyer’s market from a data center leasing perspective. But as business continues to rebound in 2021, market conditions are beginning to shift, he said.
“Demand may have been put on hold, but it’s coming back,” Bennett said.
Mark Noonan, chief revenue officer at Austin-based Data Foundry, agreed that a lot of prospective projects were impacted during the coronavirus pandemic. Where large tech companies, like Netflix or Amazon, by massively expanding their digital capabilities, smaller enterprise clients largely paused prospective data center projects, Noonan said.
But as business activity increases a year into the pandemic, Noonan said Data Foundry is also seeing an increase in demand for its services.
“We do see a lot of demand, and we do have inventory,” Noonan said. “We actually believe that we need more inventory to service the demand, so we are actually actively expanding in both of our markets right now.”
Noonan said Data Foundry is expanding on both of its existing data center campuses in the Houston region. In January 2020, Data Foundry completed the build out of a new 27,000-square-foot data hall at its Houston II campus at 660 Greens Parkway. The Greenspoint site was already home to a 350,000-square-foot data hall with a 60-megawatt power capacity.
The Houston region also attracted a new entrant to the Texas data center market recently. Virginia-based Element Critical, a provider of data center co-location services, expanded into the Lone Star State by purchasing Skybox’s massive data center in Katy, the firm announced in March. Located at 22000 Franz Road near the Energy Corridor, the facility sits directly adjacent to a 400-megawatt substation, boasts boasts a 6-inch-thick concrete roof and can sustain hurricane-force winds. Skybox continues to serve in key roles operating the Katy facility under Element Critical’s ownership.
Ken Parent, Element Critical’s CEO and the former COO of real estate investment trust The Mills Corp., said the opportunity to purchase a state-of-the-art facility in the strong Houston market was one the firm couldn’t pass up.
“There’s plenty of data centers, but when you look at the higher-quality facilities in [Houston], there are fewer of those,” Parent said. “We want to target those discriminating customers that really need a very robust and reliable solution.”
Element Critical focuses on purchasing existing data center facilities as opposed to building out new, ground-up projects, and Parent said he sees opportunity for other expansions in key Texas markets. The firm is eyeing opportunities to expand its data center co-location services into Austin, Dallas and San Antonio as corporations relocate to Texas in large numbers and demand for technology increases.