Kevin Imboden, Director of Research, Data Center Advisory Group
“The Edge” is a commonly heard buzzword at the core of the data center conversation, whether it be edge computing, edge data centers, or device and cloud edges. But what is this edge, and why are so many in the industry feeling so….edgy?”
Simply put, edge computing means moving applications and user services to the far points of a network. Rather than having all processing handled at a central data center, the network utilizes an array of smaller, local centers at the network “edge” that is closer to the end users. There are many benefits to this architecture, most centered another fun buzzword, the Internet of Things (or IoT). This is the current and impending growth of everyday items with sensors and software in them, reporting on their status to a larger network. These items produce frequent and often consistent bursts of data, some of which are unimportant (the “machine is functioning” messages) or more critical (“device has broken!”). Unimportant messages can bounce to a local point and go no further; critical messages can be sent to the central hub and processed accordingly. Latency is a key in these issues; in the much-prophesied world of self-driving cars, lag is out of the question. In more prosaic applications, the amount of content streaming on all our collective devices provides a constant-use case throughout peak times.
Real Estate and How It Is Affected
In real estate terms, the days of one large, central data center handling all processing and applications for clients are on the way out. The question then becomes, how are things handled at the edge? How big does an edge center need to be? Two main schools of thought have emerged. The more traditional approach is constructing centers with less capacity in second- and third-tier markets like Portland, Minneapolis, Denver, or Phoenix. Providers in these arenas include companies like EdgeConneX, vXchnge, Cologix, 365, or the recently-combined Peak10+ViaWest (now Flexential). Rather than owning their properties, most of these operators lease smaller space in larger centers or in buildings that may not have a main data center use. In the case of EdgeConneX, only 12 out of its 29 centers are over 50,000 square feet with many smaller than 30,000; for Cologix, three out of 19 centers break the 100,000-square-foot mark and the rest are smaller than 50,000 square feet.
Smaller Means Quicker
The other approach that is gaining traction is the use of micro data centers to perform even more specific tasks at the edge. These are generally small, container-sized units located close to mobile phone tower sites for maximum response time. Companies such as EdgeMicro and DataBank have recently made strides in their portfolio expansions, with EdgeMicro aiming to launch at 400 tower sites in secondary markets across the US. DataBank has announced a $410 million credit facility with intent to place thousands of units at mobile tower bases.
As needs continue to shift, the eventual topology will probably involve a mixture of all types- hyperscaled or large centers at key points, smaller centers close to the edge, and microscale at the bleeding edge. The biggest winners in the data center space in the future will be those who can scale with their clients and deploy solutions rapidly and across wide-ranging geography.
Based in the San Francisco Bay area, Kevin Imboden is Director of Research for Cushman & Wakefield’s global Data Center Advisory Group. Since 2007 Kevin has expertly interpreted real estate, retail, and economic data while leading large global research teams of researchers. His experience includes 8 years at Real Capital Analytics, most recently as Director of Research.