Seattle, WA, June 20, 2017 – Sabey Data Centers announced today that the federal Department of Energy (DOE) has recognized the company as the data center operator that achieved the highest level of energy savings in the Department’s 2017 Better Buildings Progress Report.

The citation by the DOE was presented last month in Washington, D.C. at the agency’s 2017 Better Buildings Summit trade conference. The Better Buildings Challenge enrolls enterprise “partners” across a broad spectrum of industry sectors. In the program, DOE challenges companies to showcase solutions to cut energy intensity in their buildings portfolio-wide by 20% over a 10-year period.

Sabey Data Centers was noted not only for having achieved its goals in 2016, but also for having the highest percentage of savings so far of all data center operators enrolled in the Better Buildings Challenge program. Second and third highest savers were eBay and Digital Realty Trust, respectively – two of the largest data center operators in the world.

Rob Rockwood, President, Sabey Data Centers, said, “To be cited as a company that has a proven approach to significant energy savings is a great honor. It’s also a testament to our operations staff’s everyday commitment to energy efficiency and the eagerness on our customers’ part to embrace these practices.”

The DOE also highlighted Sabey Data Centers’ Intergate.Quincy facility in Washington State as a “Leadership in Action” model for the industry. At the Summit, the DOE stated: “Sabey Data Center Properties has demonstrated that high efficiency design can be applied effectively in co-located data center spaces by achieving 41% savings at the multi-tenant Intergate.Quincy facility.”

About Sabey Data Centers

With a portfolio of more than three million square feet of mission critical space, Sabey Data Center Properties is one of the largest privately-owned multi-tenant data center owner/developer/operators in the United States. Sabey specializes in scalable, custom-built solutions including data center ready shell space and fully turnkey data centers managed by Sabey’s award-winning critical environment staff. Consistently recognized for its reputation for operational excellence through its world-class data centers and sustained uptime, Sabey is proud to provide data center services to many of the world’s top financial, technology and healthcare companies. http://sabey.com/datacenters/

NEW YORK, N.Y. – In recent years, the Greater New York data center market has faced several strong headwinds, including the financial crisis and its chilling effect on spending, fallout from flood-related outages during Superstorm Sunday, and a tough competitive environment for the region’s wholesale providers.

But data center professionals say the New York/New Jersey market has begun to stabilize, as leasing has gradually absorbed vacant space. The region has recently seen some new entrants, and one long-time player is reporting signs of a rebound. There’s also been the emergence of a new sub-market in Rockland County, N.Y.

The New York/New Jersey region has always been a composite data center market, segmented by geography and business models, with carrier hotels in Manhattan, connected colocation centers in Northern New Jersey, and a cluster of wholesale data centers in Central New Jersey Trends in the New York region were discussed in several panels at the recent Greater New York Data Center Summit, a CapRate Events conference held at Convene. They says the economics of power remain a challenge for New Jersey wholesale providers, with many large customers opting for the cheaper electricity and critical mass found in Northern Virginia.

As some look to the future, they see the potential for new technologies to boost the data center business in the region’s population centers.

“What will the Internet of Things or autonomous driving mean for your data center?” asks Peter Feldman, the CEO of DataGryd. “Am I going to need a much bigger data center just to control those cars? It comes back to latency, and how this is going to work.”

Cities are expected to be the focus of investment activity around autonomous cars, which could generate as much as $7 trillion of economic activity by some estimates, and generate extraordinary data traffic in major cities.

The View From Manhattan

It’s been five years since Superstorm Sandy brought catastrophic flooding to Lower Manhattan, affecting several data center buildings that lost power when their ground level fuel storage pumps failed.Sandy established new parameters for risk, prompting some companies to move uptown and others to relocate their data centers out of the region. In the hurricane’s aftermath, the Manhattan market saw several important developments: 

  • Sabey Data Centers acquired and renovated the former Verizon building at 375 Pearl Street. In addition to updating the building for modern data center space, Sabey has also retrofitted 15 floors of the building for use as office space.
  • DataGryd took over a large chunk of space at 60 Hudson Street, and made major infrastructure upgrades at the iconic carrier hotel.
  • Google acquired the city’s other marquee carrier hotel at 111 8th Avenue, but is using it for office space, and reportedly doing no new leasing to data center tenants.

That’s a lot of activity for a market that had been stable for many years. Despite Sandy and the turbulence in the financial sector, having data center space in Manhattan is essential for many blue-chip companies and service providers. Manhattan is also seeing demand from international companies.

“Asian companies are looking for footprint in the United States,” said Feldman. “The more successful Asian players have their base of big customers, and they’ll want to get to a big city like New York or Chicago or Silicon Valley.”

“The existing centers in Manhattan are continuing to see growth and are working to get more out of their footprint,” said Matthew Monaco, Senior Director at Equinix, the industry’s largest colocation provider. “You’re also seeing the emergence of interconnection density in Secaucus and several other sites in NJ.”

Monaco said many companies are pursuing a strategy where they host a small number of cabinets in New York, but place a larger footprint in New Jersey.

DataGryd’s Feldman concurred. “The hub and spoke distribution method still holds true,” he said. “We’re seeing some edge customers come to us because they need a hub to bring the traffic back.”

The importance of the city’s carrier hotels was reinforced by Digital Realty, the world’s largest data center landlord. Big-city “Internet gateways” have always been a focus for Digital Realty, and that’s still the case today, even as its footprint spreads well into the suburbs.

“We still have fairly dominant positions with our Internet gateways into the city, which is obviously focused on performance-sensitive colocation and interconnection points,” said Bill Stein, the CEO of Digital Realty. “We continue to see strong demand, be it at 111 8th, 60 Hudson or 32 Avenue of Americas.”

Evolving Market in New Jersey

For all their connectivity, the Manhattan carrier hotels have relatively limited footprints. Companies seeking larger chunks of data center space have always looked across the Hudson and housed servers in New Jersey.

Colocation hubs sprung up in Weehawken, Secaucus and Newark to provide connectivity and hosting for Wall Street firms. In 2007, developers began building wholesale data centers in central New Jersey, and soon began to win customers who might otherwise build their own facilities. There’s also a modular data center business operated in Edison by IO, which plays in both the retail and wholesale markets.

The initial strong momentum for wholesale has slowed since 2013, when the New Jersey market faced an oversupply of space.
“New Jersey is transitioning from a wholesale market to a retail colo market,” said Jeffrey West, Director of Data Center Research at CBRE. “It’s been a slow couple of years. But like California, New York and New Jersey will always be a critical market.”

“The New York/New Jersey area hasn’t kept up with markets like Northern Virginia,” said Rick Drescher, Managing Director of the Critical Facilities Group at Savills Studley. “At the local and state government level, we don’t have nearly the visibility we should.”

A key challenge is the price of electricity, which runs 15 to 16 cents per kilowatt hour in New York, and about 9 to 10 cents per kWh in New Jersey. That makes for a tough comparison with “Data Center Alley” in Ashburn, where power is 6 to 7 cents per kWh.

“That price difference is hard to overcome,” said Drescher. “If you’re building 25 or 30 megawatts, it adds up.”

The Road Ahead

The wholesale market in central New Jersey is in a transition with the arrival of two new players. In 2016 QTS Data Centers acquired the huge DuPont Fabros Technology NJ1 data center in Piscataway. DuPont Fabros built the facility seeking large-footprint colo deals, but several industry veterans say QTS’ broader mix of products – it sells wholesale space, retail colocation and managed services – is a better fit for the current New Jersey market.

There’s another new player just up the road in Somerset, where CyrusOne has acquired a wholesale data center built by Sentinel Data Centers. In recent years, CyrusOne has been one of the fastest-growing players in the wholesale market.


Panelists at the CapRate event see progress ahead for the New Jersey market.

“There will continue to be good absorption,” said Monaco. “It’s still a buyer-friendly market. The supply will be absorbed over time.”

“I think pricing is going to be more aggressive,” said Scott Palsgrove, VP of Sales and General Manager for New Jersey at Cologix, which has data centers in Parsippany and Ceda Knolls. “We’re willing to get customers in the door, because we believe they’ll grow with us. There seems to be a lot of capacity in this market, and it’s not moving as fast as it should.”
Among the major competitors in the market, CoreSite is notable for its upbeat assessment of market conditions.

“We feel good about the funnel in the New York/New Jersey market,” said Paul Szurek, the CEO of CoreSite, in a recent conference call. Szurek said CoreSite has signed 20 new and expansion leases in the region in the first quarter of 2017, more than 60 percent above the trailing 12-month average.

“Leasing at NY-2 (in Secaucus, NJ) was quite robust accounting for two-thirds of leases executed, and the majority of new logo signed in this market,” Szurek said. “We see a steady stream of leasing activity among smaller customer deployments, which is weighted toward the enterprise vertical including financial services and healthcare.”

Tested by Time, Trials

There’s also been activity in Rockland County, where a new sub-market has emerged. The current nexus of activity is Orangeburg, where Sentinel Data Centers and Russo Development partnered to build a new data center for Bloomberg, and 1547 Realty opened a data center with Green House Data as the anchor tenant. Meanwhile, JP Morgan Chase has expressed interest in acquiring land at the former Rockland Psychiatric Center for use as a data center.

The activity in Orangeburg is focused on financial firms, a promising development for the region’s data center scene, which is stabilizing as Wall Street has selectively resumed interest in local IT operations.

“I think we’ve gotten rational and operators have taken a slower approach,” said Matt Gleason, GM for the Northeast for CoreSite. “This market will go as the financial services guys go. It’s that kind of market.”

Feldman notes that the data centers in New York have unusual experience with resiliency and recovery, noting that 60 Hudson Street and other NY facilities “have been tested by terrorists and acts of God.”

Source: