Is your landlord an asset manager or a data center company?

I just read an article about how Sears has become a zombie retailer. I am guessing the reference to zombie is designed to tie into a Halloween theme while also compare it to an actual walking dead person that eats brains. I haven’t been in a Sears in at least 5 years – for any reason. The one thing in the article posted here that caught my attention was a comment about the CEO:

“He’s not a retail executive, he’s an asset manager,” said Mary Ross Gilbert, managing director at Imperial Capital. “What we’re seeing reflects what an asset manager would do, which is find ways to realize value.” 

Then it hit me – there are a lot of data center companies who are asset managers vs. data center operators. The differences can be subtle if you don’t know much about the industry or they can be pretty obvious if you do. For instance, an asset manager will find a building – any building like a strip mall, office building downtown, or brewery and think its a great deal so he buys it. Then he spends 2-3x the amount of money to improve the asset to turn it into a data center because data centers are a hot asset class right now. The asset manager is now in the data center business.

To maximize revenue things like over subscription to the power system is implemented, buying used generators from farmers for expansion is acceptable, and running cables and piping (which is really expensive) into nooks and crannies of buildings to try to monetize stranded power that came about as part of a bad design happens, as well as other things that if you don’t know, you find out quickly. Our personal experience was this – one firm who easily had the highest reputation produced a design we paid $25,000 US for that got us a $46M design for an 8MW Tier III facility. It was a rock solid design, used generally accepted principles across the board, and was $21M more than the better design we selected. Why? Piping, conduit, and cables are extremely expensive and if you don’t employ a scalable solution that allows you to utilize your power footprint in chunks, you will overspend. By a LOT.

What was the difference? We are data center guys. We are not asset managers, we know what questions to ask, which buildings make good investments and how to deploy a data center for less than $4M/mw until you run out of power. We like using our brains, not eating them.


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