365 Main Expands Into Phoenix, Northern Virginia

365 Main has acquired data centers in Phoenix and northern Virginia as it continues to expand.

Rich Miller

June 29, 2006

3 Min Read
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365 Main has acquired data centers in Phoenix and northern Virginia as it continues to expand, citing strong customer demand for top-quality mission-critical facilities. The Phoenix property is a fully operational 315,000 square feet center in the Price Road tech corridor in Chandler, which the company purchased last December. The northern Virginia data center is a 145,000 square foot site on Lafayette Center Drive in Chantilly, which is expected to open for business in September.

365 Main said its choice of expansion cities was guided by customer demand and affordable power. "The demand we're seeing is consistently coming from the enterprise sector," said VP of marketing Miles Kelly, who said many of 365 Main's customers at its San Francisco facility are interested in expansion space in one of the two new markets. "Phoenix has become well-recognized as a prime disaster recovery market, so our pipeline is pretty fresh," he said.

365 Main, which also had a grand opening for its new Los Angeles data center yesterday, focused on "power-sensitive" geographic markets. Customers will pay about 4 cents a kilowatt for power at the new sites in Northern Virginia (Dominion Power) and Phoenix (Salt River Project). That's a third of the rates at the company's San Francisco and Los Angeles centers, said company president Chris Dolan.

"Power is the first thing everyone asks about now," said Dolan. "It's a major concern, so we developed a billing model that only charges customers for exactly what they use. Most companies charge a flat rate per month in a 'use it or lose it' structure, which usually means that the customer loses. But that's not the way we like to do business, so we came up with a different model that is more fair to the customer."

There are more deals to come for 365 Main. "We see opportunity in other markets," said Dolan. "The glut of data centers is really over, and we're in development phase again." The company's executive team has experience with data center development from having worked together at AboveNet during its expansion in 1999-2000.

Dolan cited data from Tier 1 Research that high-end U.S. data centers are 70 to 80 percent full, and existing space is filling up faster than new real estate is coming on the market. Demand for U.S. data center space grew 11 percent in the last 12 months, Tier 1 said, and has grown six percent in the last six months alone.

"365 Main has come out of nowhere to establish itself as an impressive player in the premium data center market," said Andrew Schroepfer, president of Tier 1 Research. "The key is the management team's strong experience in data center construction and operations. 365 Main's strategy is to place high quality data center facilities in markets with strong demand. It's no wonder than they have achieved remarkable success in a short time."

"The slow but steady recovery of the tech market, combined with new reporting regulations, physical factors such as natural disasters, and the threat of network attacks, have brought data centers to the spotlight again," said Dolan. "And with this carefully executed expansion we are very well-positioned to service any hosting provider or high-end enterprise with a safe, controlled, compliant environment to run and/or protect their business."

The Los Angeles center is getting off to a strong start, according to Kelly, who noted the demand for data center space from the entertainment industry. "Here in LA what we're really seeing a lot of interest in is the gaming space," he said. "Community gaming is really hot."

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