H5 Data Centers announced Thursday the purchase of the Cleveland Technology Center located at 1625 Rockwell. The four-story data center, which was formerly owned and operated by ByteGrid, is 333,215 SF and is located in downtown Cleveland. The building is fed by dual 10 MW feeds from two separate substations. H5’s attraction to the facility was strategic, as it’s located directly on a key Ohio point-of-presence site which accesses high speed fiber routes from both Chicago and New York. The site currently has 250 kW of commissioned power available, with 300 kW coming to the building in three months. Additional plans to deliver 1 – 2 MW of commissioned power in 2018 are underway as well.

The Bet on Secondary Data Center Markets

While H5 has locations in Northern Virginia, Silicon Valley, and Phoenix, they have intentionally invested in smaller markets like Atlanta, Charlotte, Denver, San Luis Obispo, and Seattle. The acquisition of the Cleveland Technology Center plants the flag in another secondary city. Although Cleveland might be smaller than other areas, it offers access to a large business and population market. Cleveland is the 14^th largest metro in the US, and 60% of the US population currently lives within 600 miles of the state of Ohio. In addition, many data center users in markets like Cleveland still have their own data centers located in existing facilities. As their IT infrastructure requirements grow and change, operators like H5 are positioning themselves to be a credible option. The investment by data center operators in secondary markets is a trend that will continue in 2017.

A Competitive Economic Option

Cleveland presents an attractive economic solution for data center requirements. Not only are rental rates attractive, but H5’s all-in power cost of less than $.06/kWh is in line with other active data center market. While a one cent difference in power cost may seem miniscule, the on a 1 MW critical load requirement can save a company significant amounts of money). The facility also qualifies for a sales and use tax abatement with data center equipment, which can generate significant savings for the data center user depending on the IT requirement.

Connectivity a Driver

The connectivity needs of data center users are increasing in importance, and facilities like 1625 Rockwell can provide ongoing solutions. The abundance of connectivity helps data center users by offering access to cloud options, reducing time needed for application processing, and providing flexibility in fiber solutions. The facility currently offers access to over ten different fiber providers and will add additional providers over time. 1625 Rockwell is also geographically positioned to handle traffic from major metros like Chicago and New York.

H5 Data Centers is set to expand in other US markets in 2017, with announcements to be made in upcoming months. This Cleveland acquisition is another example of the bullish attitude held by data center operators in secondary markets. It also demonstrates the importance of competitively priced solutions offering access to abundant connectivity. These types of trends will drive acquisitions in primary and secondary US data center markets over the next year.