Storing zettabytes

By 2019 the data gathered by humankind is to reach over 30 zettabytes – more or less ten times more than we have now. To get some kind of idea of what sort of number this is, the amount of all the information stored from the beginning of human history until 2010 (from stone tablets to supercomputers) comes to just under 0.2 zettabytes.
We obviously gave up on carving on stone tablets some time ago, but the hundreds of millions of books that are still in existence are also gradually becoming obsolete; nevertheless, all this information needs to be stored somewhere. And even the virtual world requires real space. So will we be visiting byte libraries instead of physical ones? Not really, since such data is stored in places that resemble warehouses more than public buildings. Besides, why bother with such excursions if we can access whatever we need to look at via devices in our pockets? In fact, it is the very growth of the mobile device market and related services itself that is set to generate a sharp increase in the demand for new data centres.

Ready, steady...
IT sector companies are by now fully aware of this potential – unlike, it would seem, the real estate industry. Many consultancies are not even collating data on this topic. And there is a great deal of research that needs to be done in this field. According to a 2013 report by Audytel, the value of the market for data centres and related services exceeded PLN 1 bln in Poland and is on the increase. This is not an astronomical sum for many (particularly the larger) real estate players – as it amounts to roughly the development costs for one skyscraper in the centre of Warsaw. However, the potential for this market is huge.
Those firms that opt to construct their own data centres are often the largest telecoms, banks and IT companies. However, the costs for constructing and operating one’s own server buildings are massive, and for a lot of companies, the smaller ones in particular, impossible to bear. You need to regularly pay rent as well as bills for electricity and telecommunication services. Support services from engineers, operators, electricians and round-the-clock security also needs to be added to the costs. Thus a lot of companies are opting for co-locating their servers in leased data centres.
However, the scramble for this slice of the pie has already started, and so far the best placed are IT sector companies, who know the requirements of their clients inside out. “A reasonable alternative to operating one’s own server building is data centres, which benefit their users due to economies of scale. Due to these, the co-location services and dedicated servers are several times cheaper and safer,” explains Robert Paszkiewicz, the marketing director of ATM, the largest supplier of such services on the Polish market. “Our asset is also attractively priced in terms of services compared to the offer of Western European suppliers. Thanks to this, the Polish data centre market is one of the fastest developing in Europe. It has been growing at 15–20 pct per annum for several years now,” insists Robert Paszkiewicz. His company has recently decided to build a new co-location facility in Warsaw (on ul. Grochowska) and is also planning another, which should be finished in mid-2015. ATM has not chosen Warsaw by accident: it is the largest market for such services in Poland, offering several dozen data centres. This has come about for a number of reasons – the capital attracts a larger share of the nation’s business and offers good technical conditions.
Katowice is also a good place for such an investment as it enjoys a great deal of popularity among companies in the south of Poland. Data centres have also been built in cities such as Kraków, Poznań, Łódź, the TriCity, Wrocław and Radom. There are now a total of over 70 facilities comprising app. 60,000 sqm. The area of each is not great, usually not more than 1,000 sqm, but a handful measure a few thousand square metres. However, the key factor is not the size. The costs for using such centres are not calculated per sqm but per 1 kWh (kilowatt-hour) – because the energy used by the servers and cooling systems constitutes the largest expense.
In light of this, it is perhaps unsurprising that Facebook chose the Swedish town of Luleå near the Arctic Circle for its European data centre. Such a location allows the company to save money on the cost of cooling the servers, while a hydroelectric power plant that has been constucted nearby meets its electricity requirements. The site has proved to be so successful that the company, which is based in sunny Palo Alto, announced only a few weeks ago that it now plans to further extend the complex. And it is not the only company with an interest in the region. Another internet giant, Google, has taken a special liking to the Finnish town of Hamina. At the end of 2013 the company announced that on top of the EUR 350 mln that had already been invested it would add PLN 450 mln for the extension of its data centre in the town, which is cooled by water drawn from the Gulf of Finland.

Europe ahead of China
The true shapers of the data centre market are, however, the largest metropolises, which generate substantial demand for co-location services for the business, IT and financial sectors. In Europe the major locations are London, Frankfurt, Paris, Amsterdam and Madrid. According to research by CBRE, ‘first-level’ cities already have an area of nearly 700,000 sqm. However, it needs to be said that in the majority of these cities vacancy levels reach more than a dozen or so percent (except for Frankfurt – 9.95 pct), and these levels are considered to be quite low.
However, competitors are already breathing down the necks of these first-comers on the scene. CBRE is expecting significant investment in the CEE region, citing a report by specialist consultancy BroadGroup that says that the Polish, Czech, Hungarian and Romanian markets are enjoying the most interest. By 2017 the area of the data centres in these countries is expected to grow by 70 pct. This has been confirmed by research carried out by DLA Piper, which asked experts from various branches of the economy across the world interested in data centres about the major trends on the market. The results are very promising for our region. Respondents expect that within the next three years the highest growth in the data centre sector is to take place in the UK (12 pct of those surveyed) and Central and Eastern Europe (11 pct). Our region elicited an even more favourable response than China, which was the most attractive for 10 pct of the respondents.

Business is brisk
These forecasts are not without basis, particularly if we take a closer look at the investment set to take place in our region. A server farm planned by Data Valley Enterprises in Estonia is intended by the investor to become a European giant among such centres. The first stage will involve the construction of a 30,000 sqm facility in an investment of EUR 170 mln and should be ready in 2017. The design of the project allows for its further extension to as much as 200,000 sqm and would cost a total of EUR 600 mln. There is also a great deal of activity going on in Russia. Sberbank – the largest bank in the country – is planning to build a 7,000 sqm centre in the Skolkovo technology park; while Orient Express Bank has announced the outsourcing of its data handling to the DataSpace complex. Meanwhile, in Poland Qumak is to develop the largest medical data processing centre in the CEE region for the Data Techno Park in Wrocław. The contract for equipping the facility is worth PLN 144.8 mln. The same company has also recently built a data centre in the new headquarters of cooperative banks from the BPS group in Warsaw in an investment of more than PLN 5 mln. In addition to this, Comarch is to build an office, service and data centre with a total area of over 11,700 sqm for a consortium of Łęgprzem, ZSK and Graphbud for more than PLN 62 mln.
The growth of information technology is set to bring about the rapid development of the data centre market. Analysts claim that countries in our part of Europe are at a pivotal point in this process and have a chance to lead the way. The decisions that are to be made now will determine the position that local real estate companies achieve in this race.

Jarosław Zagórski
commercial and business development director of Ghelamco Poland

Specific knowledge and appropriate preparation
Having a data centre is a necessary requirement for many businesses. It is hard to imagine a telecom, SSC or R&D company operating without such a facility. However, this does not mean that every firm that needs a data centre will automatically locate it in their headquarters, i.e. in a modern office building. Such facilities are generally located away from the company’s headquarters for a number of reasons, such as the costs, technical possibilities and security. Of course, there are also situations when the tenant’s requirements involve opening a data centre in an office building or in its direct vicinity. In such a case the developer needs to consider the conditions that need to be fulfilled to prepare an area to ensure that the centre operates effectively. First of all you need to prepare the structure of the building correctly, to strengthen it so that it is able to bear devices that weigh more than typical ffice equipment; secondly, you need to ensure that the rooms have a suitable height for the dimensions of the devices and for the ventilation and air-conditioning. Such issues are equally as important as the correct preparation of the area in terms of the construction. Thus it is necessary to provide a suitable ventilation and air-conditioning system and, even more importantly, ensure an appropriate power supply that guarantees the continuity and efficienct running of the devices. The requirements of data centres considerably exceed those of a traditional office building and, for example, a data centre with an area of just a few hundred metres could have requirements similar to a 40,000 sqm office building. Regardless of a data centre’s location, opening one calls for specific knowledge and thorough preparation.

Joanna Mroczek
the head of research and consultancy at CBRE in Poland

Investors now looking at data centres
We appreciate the potential of the market even though there are still barriers, such as the high energy costs and the exorbitant prices of development plots as well as infrastructural limitations. Considering the investor activity, the construction of new shared service centres and the development of existing companies in Poland, growth in the demand for data centres is certain. Furthermore, the use of data clouds as companies move away from own-servers is part of a general trend taking place in the work environment as businesses look for savings. Nowadays companies, such as telecoms, are building such centres themselves. However, they are likely to follow the approach adopted in Western Europe to increasingly often lease facilities for cost reasons. It is also possible that sale-and-leaseback transactions for data centres will be an alternative and interesting investment product in the future – we are receiving such enquiries even now.