D a t a C e n t e r M a r k e t O v e r v i e w produced by

(1)

D a t a C e n t e r M a r k e t O v e r v i e w

(2)

2 “Understanding the ecosystem and language of

the core infrastructure driving our digital

economy has thus become a unique and

strategic advantage.”

(3)

C h i c a g o

Q 1 : 2 0 1 5

Tax Incentives

3 Sales and use taxes, property taxes, and real estate taxes all play a role in the total operating costs of data

centers. Some states, however, offer incentives that lower the operating cost, or Total Cost of Occupancy (TCO)

for both data center developers and clients installing infrastructure within these facilities.

*source: Lenio, John and Lynch, Patrick, “Impact of Taxes & Incentives on Data Center Incentives,” CBRE, July 2013.

Illinois currently DOES NOT offer

sales tax incentives that affect

data center owner/operators or

their clients installing hardware

and related infrastructure.

(4)

C h i c a g o

Q 1 : 2 0 1 5

National Industry Trends

4 2,940,000:

Number of data centers in the USA*

Expected to

DECREASE

year over year

611,400,000:

90%:

_{Amount of data generated within the past}

two years as a % of whole

Expected to

INCREASE

year over year

2,500:

_{Number of commercial data center facilities}

within the USA

Expected to

INCREASE

year over year

Total data center sq. ft. within the USA*

Expected to

INCREASE

year over year

(5)

C h i c a g o

Q 1 : 2 0 1 5

National Industry Trends

5

Country Network Provider Q1’14 iPv6 traffic %

United States Comcast Cable 13%

United States Verizon Wireless 45%

United States AT&T 11%

United States Time Warner Cable 4.7%

France Proxad/Free 19%

Germany Deutsche Telekom 9.2%

Romania RCS & RDS 17%

Germany Kabel Deutschland 30%

Belgium Telenet 24%

Peru Telefonica Del Peru 7.4%

Switzerland Swisscom 20%

Japan KDDI Corporation 12%

Germany Unitymedia KabelBW 19%

United States Hughes Network

Systems (DISH Network) 22%

Belgium Brutele 24%

United States T-Mobile 6.2%

Belgium Belgacom 5.9%

Malaysia Telekom Malaysia 1.2%

Czech Republic o2 (Telefonica) 6.3%

Norway Get AS 16%

IPv6 traffic percentage,

top network providers by volume

*source: Akamai’s State Of The Internet, Q1 2014 Report, V7, #1.”

Q1 ’14 Unique iPv4 Addresses

Q1 ’14 Unique iPv4 Addresses Q over Q Change Y Over Y Change – Global 795,443,250 1.6% 7.8% 1 United States 162,676,451 (1.4%) 8.6% 2 China 123,526,069 2.4% 11% 3 Brazil 41,298,964 12% 50% 4 Japan 40,042,679 (0.8%) (3.3%) 5 Germany 37,176,442 (0.1%) (2.4%) 6 United Kingdom 28,509,857 (0.6%) (1.2%) 7 France 28,451,546 2.4% 5.7% 8 South Korea 20,987,274 3% (1.6%) 9 Italy 20,021,068 1% (2.4%) 10 Russia 18,752,316 2.1% 3.3%

As worldwide internet access increases,

the number of total data centers in the US

decreases, but square footage of data

centers increases. Cost of energy varies

wildly across the nation.

(6)

C h i c a g o

Q 1 : 2 0 1 5

National Industry Trends

6 Retail Operators with Largest Amount of New Colocation Site

Capacity, 2012–2014 (million sq ft)

Largest Colocation Providers

by Gross Floor Space 2014

**A number of notable providers are missing from these

graphs, such as:

QTS

= 1M+ sq. ft. NEW and 3M+ sq. ft. GROSS

Digital Realty Trust

= 1M+ sq. ft. NEW and 24.5M sq. ft. GROSS

SABEY

= 500K+ sq. ft. NEW and 3M sq. ft. GROSS

(7)

C h i c a g o

Q 1 : 2 0 1 5

National Industry Trends

7 Average Cost By Location

AVE COST/kW

HOUR

North Bay Area, CA

$0.12

South Bay Area, CA

$0.10

Sacramento, CA

$0.10

Los Angeles, CA

$0.13

Seattle, WA

$0.06

Quincy, WA

$0.03

Portland, OR

$0.07

Las Vegas, NV

$0.08

Phoenix, AZ

$0.06

Salt Lake City, UT

$0.05

Denver, CO

$0.07

Dallas, TX

$0.07

Austin, TX

$0.06

Chicago, IL

$0.08

Philadelphia, PA

$0.10

Miami, FL

$0.08

Atlanta, GA

$0.06

Richmond, VA

$0.06

NYC, NY

$0.13 - $0.18

Secaucus, NJ

$0.13

**Quoted rates are outside of NYC proper. NYC (Manhattan) wholesale rates average $225-$300/kW/mo.

Market

Inventory

Vacancy

Rental Rates

(kW/mo)

Northern Virginia 402 MW 27 MW / 6.7% $135-$150 Phoenix

213 MW

4.1 MW / 1.9%

$145-$165

Atlanta 127 MW 26.2 MW / 20.7% $120-$150 Silicon Valley 116 MW 15.9 MW / 13.7% $140-$150

NYC/NJ

122 MW

20.4 MW / 16.7%

$145-$160**

Chicago 115 MW 3.6 MW / 3.2% $145-$165 Dallas/Fort Worth 113 MW 12.1 MW / 10.7% $140-$150

Q4 2014 primary wholesale colocation

"metered power" market snapshot

(8)

C h i c a g o

Q 1 : 2 0 1 5

National Industry Trends

8 1%

“Demand is now booming for the core storage and compute resources required to

run the digital economy, with elastic compute IaaS providers making it easier for any

programmer with an internet connection and a credit card to start and manage a

business online. This has meant great things for those working directly in, or indirectly

supporting, the IT industry.”

—Sean Patrick Tario

Data Center Journal’s Top 5 DC Trends of 2014:

1. Virtualization

2. Smart device mobility

3. Software-defined networks

4. Exponential increase in data to be stored

5. Consumers still think there’s a cloud

(9)

C h i c a g o

Q 1 : 2 0 1 5

Chicago Industry Trends

9 QTS Enters Chicago Market with Former Sun-Times Plant Acquisition

“QTS said the Chicago building can accommodate about 130,000 square feet of

raised floor and 24 megawatts of power. The company’s redevelopment plans

include expanding its size to accommodate about 215,000 square feet of raised

floor and 37 megawatts.”*

*source: http://www.datacenterknowledge.com/archives/2014/07/10/qts-enters-chicago-market-former-sun-times-plant-acquisition/

**source: http://www.datacenterknowledge.com/archives/2014/05/27/carter-validus-buys-ascents-chicago-data-center-212m/

***source: http://www.datacenterknowledge.com/archives/2014/05/14/new-chicago-data-center/

Carter Validus Buys Ascent’s Chicago Data Center for $212M

“Carter Validus is focused on two sectors, data center and healthcare, citing trends in

society it believes will boost demand for data storage and outpatient healthcare. The

company acquired acquired $593.2 million in real estate assets in 2013, bringing its

total portfolio to $988 million. Of that 2013 total, $589 million was data center assets,

compared to $399 million of healthcare facilities.”**

CenterPoint Plans 12-Story Data Center Next to Chicago Data Hub

“A number of developers are pursuing new data center projects in

downtown Chicago, including Ascent Corp. and perhaps QTS Realty.

Existing providers include Digital Capital (725 S. Wells) and Server Farm

(10)

C h i c a g o

Q 1 : 2 0 1 5

Chicago Industry Trends

10

41 commercial data centers house

28 different providers in the Chicago region

(11)

C h i c a g o

Q 1 : 2 0 1 5

Network IXP’s

11 Exchange Name

Long Name

City/Region

Participants

Equinix Chicago

Equinix Chicago Exchange

Chicago

247 ChIX

Chicago Internet Exchange

Chicago

30 CoreSite - Any2

Chicago

CoreSite - Any2 Chicago

Chicago

15

*source: peeringdb.com. Accessed August 12, 2014.

(12)

C h i c a g o

Q 1 : 2 0 1 5

Network IXP’s

12 Exchange Name

Long Name

City/Region

Participants

Equinix Chicago

Equinix Chicago Exchange

Chicago

298 ChIX

United IX - Chicago

Chicago

16 CoreSite - Any2

Chicago

CoreSite - Any2 Chicago

Chicago

18 GCIIX

Greater Chicago International Internet Exchange

Chicago

4 AMS-IX Chicago

AMS-IX Chicago

Chicago

2

*source: peeringdb.com. Accessed April 4, 2015.

(13)

C h i c a g o

Q 1 : 2 0 1 5

Network Latency

13

10 10 11 19 19 20 23 23 25 26 26 29 32 35 37 44 45 51 51 54 55 57 102 103 129 156 207 238 261 286

Kansas

City

Minneap

olis

Cinci

nnati

Washingt

on DC

Ashburn

- POP

Dalla

s

Atlanta

Manha

ttan

Austin

Houston

Denver

Charlotte

Orlando

New Orleans

Miami

Phoenix

Las Vega

s

Los Angeles

San Franci

sco

Portland

San Diego

Seattle

London, UK

Honolulu

Aterda

m, Netherlands

_{Amazon, J}

apan

Hong Kong, Chi

na

Brisb

ane, AU

South Afric

a

Shangha

i, China

Latency in milliseconds, from Chicago

(14)

C h i c a g o

Q 1 : 2 0 1 5

DC Directory

14 1%

Name

Retail Wholesale Hosting Location(s)

TYPE (TICKER: EXCHANGE)

Address

City

360TCS

x Local Private 360 E. 22nd St. Lombard

365 Data Centers

x National PE Backed 427 S. La Salle St. Chicago

AlteredScale

x x Local PE Backed 601 W. Polk St. Chicago

Ascent - CH3

x Regional Private 717 S. Desplaines Chicago

ByteGrid - CHI1

x x Regional Private 4267 Meridian Pkwy. Aurora

Carter Validus

x National Private REIT 505 N. Railroad Ave. Northlake

CenturyLink - CH2

x x Global Public (CTL: NYSE) 2425 Busse Road Elk Grove Village

CenturyLink - CH3

x x Global Public (CTL: NYSE) 10 S. La Salle St. Chicago

CenturyLink - CH4

x x Global Public (CTL: NYSE) 350 E. Cermak Rd. Chicago

Colo@

x National Private 725 S. Wells St. Chicago

Continuum Data Centers

x x Local Private 603 Discovery Dr. West Chicago

CoreSite - CH1

x National Public REIT (COR: NYSE) 427 S. La Salle St. Chicago

CyrusOne

x x National Public REIT (CONE: NASDAQ) 1850 Springer Dr. Lombard

Digital Capital Partners, LLC

x Local Private 725 S. Wells St. Chicago

Digital Realty Trust

x Global Public REIT (DLR: NYSE) 350 E. Cermak Rd. Chicago

Digital Realty Trust

x Global Public REIT (DLR: NYSE) 600 S. Federal St. Chicago

Digital Realty Trust

x Global Public REIT (DLR: NYSE) 9333 Grand Ave. Franklin Park

Equinix - CH1, CH2, CH4

x Global Public (EQIX: NASDAQ) 350 E. Cermak Rd. Chicago

(15)

C h i c a g o

Q 1 : 2 0 1 5

DC Directory

15 1%

Name

Retail Wholesale Hosting Location(s)

TYPE (TICKER: EXCHANGE)

Address

City

Forsythe Data Centers

x Local Private Sub of Forsythe Technology 1240 Busse Rd. Elk Grove Village

Latisys

x x x National PE Backed 1808 Swift Dr. Oak Brook

NaviSite

x x Global Subsidiary of TW Cable (TWC: NYSE) 800 Jorie Blvd. Oak Brook

NetSource

x x Local Private 2368 Corporate Ln. Naperville

Peerless Network

x Local PE Backed 840 S. Canal St. Chicago

QTS Realty Trust

x x x National Public REIT (QTS: NYSE) 2800 S. Ashland Ave Chicago

Server Farm Realty

x x National Private 840 S. Canal St. Chicago

ServerCentral

x x Local Private 2200 Busse Rd. Elk Grove Village

ServerCentral

x x Local Private 350 E. Cermak Rd. Chicago

Steadfast Networks

x x Regional Private 350 E. Cermak Rd. Chicago

Steadfast Networks

x x Regional Private 725 S. Wells St. Chicago

Sungard AS - CHI-341

x x National Private 341 Haynes Drive Wood Dale

Sungard AS - CHI-711

x x National Private 711 North Edgewood Ave. Wood Dale

Telx - CHI1

x National PE Backed 350 E. Cermak Rd. Chicago

Telx - CHI2

x National PE Backed 600 S. Federal St. Chicago

Terremark

x x Global Sub of Verizon Public (VZ: NYSE) 111 Plaza Dr. Westmont

XO

x National Private 1808 Swift Dr. Oak Brook

XO

x National Private 140 S. Dearborn St. Chicago

zColo Zayo

x x Global PE Backed (division of Zayo) 600 S. Federal St. Chicago

(16)

Chicago continues to serve as the largest interconnction

hub in the Midwest. As such, there is a seemingly never

ending expansion of mega data center buildouts

occuring both downtown within the surrounding suburbs.

This reality, coupled with a resurgence of startups in the

region, has caused demand for data center and hosting

services to boom over the past few years here... and

these metrics are showing no signs of slowing any time

soon.

(17)

C h i c a g o

Q 1 : 2 0 1 5

Local Geological Factors

17 No hurricane risk

*source: Matthew Erickson, Joe Burgess, and Bill Marsh of The New York Times, April 30, 2011. Accessed online, nationalatlas.gov data range = 2001-2009

Average Annual Precipitation

(in inches) 2005 - 09

Moderate precipitation

(18)

C h i c a g o

Q 1 : 2 0 1 5

Local Weather Factors

Low earthquake risk

18 SDC

EARTHQUAKE HAZARD

A Very small probability of experiencing damaging earthquake effects.

B Could experience shaking of moderate intensity.

C Could experience strong shaking.

D0

Could experience very strong shaking (the darker the color, the stronger the

shaking). D1

D2

E Near major active faults capable of producing the most intense shaking.

(19)

C h i c a g o

Q 1 : 2 0 1 5

Local Geological Factors

Moderate thunderstorm risk

19 Low wildfire risk

Thunderstor

Number of damage-causing events

11 or Greater

7 - 10

4 - 6

1 - 3

0 Wildfires

Number of events that resulted in damage

11 or Greater

6 - 10

3 - 5

1 - 2

0

(20)

C h i c a g o

Q 1 : 2 0 1 5

Local Geological Factors

20 High lightning risk

45 or Greater

23 - 44

10 - 22

3 - 9

1 - 2

No Events

Lightning

Number of events that resulted in damage

Tornado Risk

Moderate tornado risk

(21)

C h i c a g o

Q 1 : 2 0 1 5

Utility Service Territories

21 1%

*source: http://www.exeloncorp.com/energy/delivery/comed.aspx, accessed August 13, 2014.

(22)

C h i c a g o

Q 1 : 2 0 1 5

Energy Fuel Mix

22

*source: Commonwealth Edison Company, “Environmental Disclosure Information: Twelve Months Ending December, 31, 2012.”

Wind

Power

15%

Other

7%

Coal-Fired

Power

31%

Hydro

Power

7%

Natural

Gas-Fired

Power

14%

Nuclear

Power

26%

Commonwealth Edison

(23)

C h i c a g o

Q 1 : 2 0 1 5

Power Rates

23

*source: eia.gov, Electric Power Monthly. Accessed August 12, 2014

Chicago: Average Retail Price of Electricity to Ultimate Consumers by End-Use Sector

Residential

0 1 2 3 4 5 6 7 8 9

10 11 12

Cents per Kilowatthour

(24)

C h i c a g o

Q 1 : 2 0 1 5

National Power Connections

24

(25)

C h i c a g o

Q 1 : 2 0 1 5

National Energy Projections

25

*source: AEO2014 Early Release Rollout Presentation

Paul J. Nitze School of Advanced International Studies, Johns Hopkins University December 16, 2013, Washington, DC, by Adam Sieminsky, December 16, 2013

“Non-hydro renewable generation more

than doubles between 2012 and 2040”

Non-hydro renewable generation, billion kilowatt-hours per year

2001 2005 2010 2015 2020 2025 2030 2035 2040 Historical Projections 500 400 300 200 100

(26)

C h i c a g o

Q 1 : 2 0 1 5

National Energy Projections

26 Delivery Energy Consumption

By Sector 1980 - 2040 (quadrillion Btu)

U.S. Primary Energy Consumption by Fuel

By Sector 1980 - 2040 (quadrillion Btu)

*source: U.S. EIA, Annual Energy Outlook 2014 Early Release Overview

1980 1990 2000 2010 2020 2030 2040

40

30

20

10 History 2012 Projections

1980 1990 2000 2010 2020 2030 2040

120

100

80

60

40

20 History 2012 Projections

(27)

C h i c a g o

Q 1 : 2 0 1 5

National Economic Trends

27 Tech Services Job and Office Rent

Growth 2010 - 2012

*source: CBRE Research and Bureau of Labor Statistics. *Job growth 20011 vs. 2009 and rent growth Q2 2012 vs. Q2 2010