CyrusOne Plans 1 Million SF Data Center in Phoenix

High-density colocation specialist CyrusOne plans to build an enormous data center in Phoenix, which will reach 1 million square feet of space upon completion. The announcement marks the most ambitious expansion yet for CyrusOne, the data center and colocation unit of Cincinnati Bell.

Several of the backup generators at one of the Texas data centers operated by CyrusOne. The company, a unit of Cincinnati Bell, plans a huge expansion in Phoenix. (Source: CyrusOne).

High-density colocation specialist CyrusOne plans to build an enormous data center in Phoenix, which will reach 1 million square feet of space upon completion. The announcement marks the most ambitious expansion yet for CyrusOne, the data center and colocation unit of Cincinnati Bell. The expansion is also a sign of the momentum for the Phoenix market, which is seeing strong demand for data center space, primarily from companies on the West Coast.

The project was announced by CyrusOne President Gary Wojtaszek during Cincinnati Bell's quarterly earnings call, which highlighted the surge in colocation revenue from the company's acquisition of CyrusOne in 2010.

110 Megawatts of Power Support

"CyrusOne recently entered into purchase agreements on a large parcel of land near Phoenix, Arizona," the company said. "During 2012, it plans to begin construction of what will be one of the largest and most advanced data centers in the country. Upon full completion, the CyrusOne Phoenix data center will have more than 1 million square feet of space and power capacity for more than 110 megawatts of energy, which will be delivered from a substation that will be built on the property. Phoenix will serve as the primary location for the CyrusOne’s West Coast operations and target the northern and southern California markets."

The company expects to have the first phase, approximately 40,000 square feet, online by the beginning of 2013.

Growth in Phoenix Market

Phoenix has been a growth market in recent years, aided by a dry climate and a location that features low risk for most natural disasters. A recent analysis from Tier 1 Research found 25 data center providers operating 32 facilities in the Phoenix market. The largest player in the market is i/o, with about 53 percent market share, according to Tier 1, followed by Digital Realty Trust (17 percent) and AT&T (7 percent).

i/o is currently selling space in the second phase of 500,000 square foot i/o Phoenix facility, while Digital Realty is  in the process of building out additional data center space at the former 365 Main site in Chandler, Ariz. Phoenix NAP also has recently brought new space online in the market.

CyrusOne specializes in high-density colocation services, with a strong focus in the energy and financial services sector. The company has rapidly expanded its data center network since being acquired by ABRY Partners in 2007 and its subsequent sale to Cincinnati Bell for $525 million last year.  Since the acquisition, CyrusOne has expanded to London and is adding space in all three of its markets in its home state of Texas - building more space in Dallas, Houston and Austin.

CyrusOne Boosts Bottom Line

The expansions are expected to add 120,000 square feet to the company's footprint in 2011. Cincinnati Bell says its existing footprint of 669,000 square feet of space is currently 90 percent utilized.  The company reported that its revenue from colocation increased to $45 million in the second quarter of 2011, an improvement of 83 percent from the year-earlier period. CyrusOne contributed $23 million in revenue and $14 million of Adjusted EBITDA in the quarter.

Cincinnati Bell also officially announced that Wojtaszek has been named president of CyrusOne, shifting from his previous post as Cincinnati Bell's chief financial officer. Prior to joining the company in 2008, Wojtaszek was treasurer and chief accounting officer for the Laureate Education Corporation in Baltimore, Md., where he was responsible for the global controller and treasurer functions. Wojtaszek holds a bachelor's degree in economics and history from Rutgers University and a master's degree in finance and accounting from Columbia University.

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