H5 Data Centers has acquired a data center just a few blocks away from one of the largest data center clusters in the world in Ashburn, Virginia. The facility, previously owned by a company called DBT, sits on a five-acre parcel of land.
The Ashburn data center site has been marketed in the past, but not much work has been done on the older industrial build. H5 plans to invest in transforming the building into a move-in ready powered shell or build-to-suit facility.
The 70,000-square-foot data center is expandable to 100,000 square feet and has more than 8.5 MW of power available from Dominion Power. H5 is targeting a customer who needs about 5 MW of critical IT load. COO David Dunn said the company is already working with the utility company to increase the site's power capacity.
“We’re looking for a large, sophisticated user to take over, but we can also provide the capital and work to get it even more ready,” he said, adding that H5 has started to engineer the layout.
The facility has good infrastructure, is outside the 500-year flood plain and has high ceilings. A sample layout results in about 40,000 square feet of net usable space supporting about 1,500 cabinets, but there is a lot of flexibility, especially in terms of design. One reason is the structure has no internal columns, which can be cumbersome to design around.
H5 is proposing an air-cooled design that might not use as much water.
Over the next three or four months, upgrades will be made internally and externally. These include making aesthetic improvements inside and outside, modernizing and reinforcing the walls, and improving the loading dock area, office space, lobby, and conference rooms.
H5 has successfully employed the powered-shell model across the country. Dunn said that all current projects are substantially leased, and the company is looking to make further acquisitions.
The new property puts the company in play in one of the biggest markets. While Northern Virginia is arguably a crowded market, H5 believes that the new property is unique in that there isn’t much powered-shell space available in the Ashburn data center market.
“The supply has been pretty rational,” said Dunn. “We think the demand is strong. We consistently see new builds in Northern Virginia pre-leased.”
A powered shell usually appeals to providers who are willing to invest in competing the build-out according to their needs, said Dunn. “We’re taking a risk, but we’re able to do a build-to-suit as well,” he said. “This is a nice sweet spot for a powered shell.”
A likely tenant is a large cloud or colo provider with data center design and management know-how. Given the role Ashburn plays as a connectivity hub for all major web-scale providers, finding this type of customer isn't likely to be difficult. H5 is willing to make a bet in terms of capital investment in upgrading the site.
Some existing H5 wholesale customers include Peak 10 in Charlotte, North Carolina, and Level 3 in Seattle.
The company is eyeing other locations for further expansion.
"We continue to believe that bytes are going to continue to seek lower-cost markets as the volume of bytes goes up," Dunn said. "Companies will seek to optimize their data center spend and look for storage and compute locations in lower-cost areas, or you may see us focus on the network."
H5 recently announced it is pumping $8 million into its Denver data center for efficiency upgrades.