Jan19 breakfast briefing_slides_distribution
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This document summarizes a breakfast briefing held by CBRE Data Centre Solutions on data centre predictions for 2019. The agenda included presentations on key trends in the European colocation market, technology predictions for areas like DevOps, and M&A predictions. Market data was presented on the FLAP markets of London, Frankfurt, Amsterdam, and Paris showing strong growth. Predictions for 2019 included the possibility of lower take-up than 2018, expansion of established providers into Africa, and hybrid IT driving sale-leaseback opportunities for banks. The document also covered topics like 5G networks, Moore's Law, global data centre M&A volumes, and developer predictions around increased site finding, provisioning, and joint ventures with power providers in
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Jan19 breakfast briefing_slides_distribution
- 1. 1 CBRE DATA CENTE SOLUTIONS Breakfast Briefing 2019 Data Centre Predictions Wednesday 30th January 2019
- 2. CBRE Data Centre Solutions AGENDA 2 08.30: Registration, coffee & pastries 09.00: Welcome & Introduction Tom Glover, Head of Operators & Developers Market review and key trends in the European colocation market Mitul Patel, Head of Research Tech Predictions Duncan Clubb, Head of IT Consultancy M&A Predictions Paul Mortlock, Head of Investments DevOps Predictions Tom Glover & Stephen Beard, Associate Director Wrap Up & Networking 11.15: Event Close
- 3. CBRE Data Centre Solutions FLAP TOPICS 1. FLAP MARKET ‘STATE OF PLAY’ 2. KEY TRENDS 3. PREDICTIONS 4. PREMIER COLOCATION REPORT
- 4. CBRE Data Centre Solutions FLAP MARKET “State of Play” 2018 Q3 Market Sizes: London: 529 MW Frankfurt: 314 MW Amsterdam: 281 MW Paris: 171 MW FLAP Market Growth CAGR: 2011 – 2015: 10 % 2016 – 2018: 18 % 2019*: 16 % 2020*: 18 % CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 5. CBRE Data Centre Solutions FLAP MARKET “State of Play” 3-Year take-up Averages: 2013 – 2015: 64 MW 2016 – 2018: 155 MW CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 6. CBRE Data Centre Solutions FLAP MARKET “State of Play” CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 7. CBRE Data Centre Solutions KEY TRENDS CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ • Scale • Regional Expansions • Next Markets • Hyperscale Campuses • Constraints • Brexit
- 8. CBRE Data Centre Solutions PREDICTIONS 2018 Results CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Prediction Result Score New-Norm for take-up will continue 190MW First 'herd' of Chinese cloud / telco / internet Companies Some, but not a ‘herd’ X Continued heightened M&A activity Yes “Edge” won’t become more of a reality Yes
- 9. CBRE Data Centre Solutions PREDICTIONS 2019 CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Prediction Result Score Strong Take-up but slightly down on 2018 ? ? First established “Western” providers moving into Africa ? ? Significant Pan-European moves from developers ? ? Hydrid IT driving banking sale and leaseback opportunities ? ?
- 10. CBRE Data Centre Solutions CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ PREMIER COLOCATION REPORT
- 11. CBRE Data Centre Solutions DUNCAN CLUBB 11
- 12. CBRE Data Centre Solutions HYBRID CLOUD GROWTH FORECASTS CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Corporate IT strategies will be dominated by “Hybrid Cloud” models for the foreseeable future (at least 5 years): • CIOs are under pressure to take costs off the balance sheet or out of the organisation • Public cloud works in many cases but by no means all • Legacy systems take years to change • Hybrid Cloud models using a mixture of cloud and colo and/or on-prem data centres will work best for most medium to large organisations • Use of public cloud services will continue to grow strongly – enterprises are going multi-cloud • However, cloud spend will only account for a third of corporate IT spend on infrastructure by 2022 • Spend on on-prem infrastructure will fall but will still be the dominant sector in 2022 • The colocation data centre market will continue to grow as on-prem data centres decline Summary Forecasts Outsourced Infrastructure Spend & Total Infrastructure Forecasts Long-term trends and forecasts • Outsource or managed services models will dominate the corporate IT landscape • Today: 77% on premise, 6% public cloud, 17% managed/colo • Long-term: 10% on premise, 60% public cloud, 30% managed/colo • For 2019: • Enterprises will become more interested in Cloud Management Platforms (e.g. Abiquo, Morpheus) and orchestration systems that span the enterprise and private/public cloud environments • Cloud connectivity (SDWAN) solutions will increase in popularity, through colo providers providing direct connectivity (e.g. Equinix) or via dedicated networks with POPs in colo sites (e.g. Epsilon, MegaPort)
- 13. CBRE Data Centre Solutions MOORE’S LAW “how’s that getting on?” CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Moore's Law is the observation made by Intel co- founder Gordon Moore that the number of transistors on a chip doubles every year while the costs are halved People have been predicting the downfall of Moore’s Law for many years, but it appears to be going strong, albeit slightly slowed down • Most versions of the law based on 2 year cycle • Intel claim 2.5 years • Chip speeds are not growing quickly, but transistor size is shrinking Is it’s death still greatly exaggerated? What else? Is size important? • 7nm is the new 10nm • Some manufacturers have had 7nm products since 2015, but… • AMD this year and Intel next year • And more design effort into GPUs (for AI workloads) • Which means: more cores per chip, more processing power per blade/server • NVMe memory will continue to increase in popularity – faster than flash, requires less power • China will continue to expand its semiconductor manufacturing capacity aggressively • TV manufacturers are going to be flogging 8K sets, so expect more 8K content • Data growth will continue to explode almost exponentially, already up to nearly 3 quintillion bytes per day – over 90 of the worlds data was created in the last 2 years! It would take you 50 years to watch all the Youtube videos uploaded yesterday! • Total data in the world estimated as 33ZB! IDC think 175ZB by 2025! 1ZB = 1 trillion GB! • A stack of Blu-ray discs with 175ZB of content would reach to the moon, 23 times!
- 14. CBRE Data Centre Solutions 5G “Coming now gamechanger?” Of all the “new” technologies on the immediate horizon, 5G is being hyped as making a major impact for businesses and consumers: • It will be a lot faster than 4G – eventually! • It will have lower latency – less delay or lag when online, better for online gaming, essential for autonomous driving systems! • It will have greater capacity, meaning that it will be able to cope with huge surges in demand, and also provide connectivity for millions or billions of devices (IoT) Summary What does it do? • 2G gave us mobile email • 3G gave us mobile Internet • 4G gave us apps (video, ride sharing, delivery services, dating apps) • 5G promises everything faster and more instantaneous, with better coverage – ideal for gaming, autonomous vehicles, robotic systems, massive scale deployments of sensors, remote control of real-time systems What’s happening in the UK? • All the operators are announcing plans • EE will be rolling out to 6 UK cities in large-scale trials in 2019 – London, Cardiff, Belfast, Edinburgh, Birmiingham and Manchester in the 1st wave • National rollout should start in 2020 • Phones will be there before good coverage! In real life… • It will enable realistic virtual and augmented reality systems – e.g. HUD-style SatNav projected onto car windscreens with real-time traffic updates • Support for IoT devices, for smart homes and offices, or remote monitoring of dispersed sensors in a wide variety of applications • Autonomous cars and lorries will depend on real-time data traffic • Remote surgery and other medical procedures • Online gaming will benefit from the low latency making interaction much more instantaneous • Higher capacity and bandwidth will enable higher-resolution streaming services • Rural (or even urban) homes and businesses will have a high-bandwidth alternative to wired broadband services • A better “digital experience” for users of online business services • Will drive demand for edge data centre capacity CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 15. CBRE Data Centre Solutions PAUL MORTLOCK 15
- 16. CBRE Data Centre Solutions GLOBAL DATA CENTRE M&A VOLUMES CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ • Competitive landscape – lots of different sources of capital • Infra funds • Private Equity • Sovereign Wealth • Institutional • Strategic investors & US data centre REITS • Investors beginning looking at emerging markets e.g. Teraco in South Africa, Ascenty in Brazil, eastern Europe etc. • Specialist data centre vehicles formed which welcome passive investment. KEY THEMES
- 17. CBRE Data Centre Solutions POTENTIAL 2019 TARGETS… CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Other telco / IT disposals? More Nordic Operators?
- 18. CBRE Data Centre Solutions CBRE SCOPE ON DATA CENTRE M&A TRANSACTIONS CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ Technical Due Diligence Financial Advisory / Deal Structuring Debt Advisory Commercial Due Diligence Building Surveying / Environmental CBRE DATA CENTRE CAPITAL MARKETS
- 19. CBRE Data Centre Solutions TOM GLOVER & STEPHEN BEARD 19
- 20. CBRE Data Centre Solutions DEVELOPER / OPERATOR 2019 PREDICTIONS CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’ 1. More Site Finding in 2019 2. More Site Provisioning 3. More Site Transactions 4. More JV’s With Power Providers
- 21. CBRE Data Centre Solutions SONAR From CBRE CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 22. Roles, responsibilities and timeline Long list options Progress reviewShort list report Short list review Site tour & favoured site selection Market report Present the options Review with the client Select sites to be toured Initiate power viability study Project initiation Identify requirements & criteria Define client project team Create an action plan SONAR inspection Review long list Identify potential risks & qualities Filter & create a short list Database update & research Update site filtering criteria Map new criteria elements Review the power grid map Site sourcing Market search Map available options Collect detailed information Site assesment Visit the sites Review technical aspects Investigate vicinity Site feasibility study Transaction Management Finalise feasibility studies HoT negotiation Exchange & completion 02 01 04 05 06 03 07 Data Centre site selection process CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
- 23. Power Viability Planning Fibre Connectivity Flight PathFlood Risk Hazards Target Area 1 2 3 4 5 Planning Status Outline consent Planning policy Floor area coverage Maximum height Building ratio Vicinity Existing Data Centres Providers Longhaul Connectivity indicatives Landing Station Submarine cables Availability Approach chart Terminal manoeuvring area Areas of Intense Air Activity Training areas Aerodrome Traffic Zones Aerial Lanes Power Viability Timing PriceTiming Electrical Substation Medium Voltage High Voltage Amperes Circuit Breaker Transformer capacity Power Availability Power grid upgrades DNO Transmission lines Alternative power sources MVA kV Rivers & Steams Flood map Risk zones Surface water Flood defences Flood simulation Oil refinery Gas pipeline Petrol station Earthquakes Tectonic plates Mining Rail & Subway Rail Military zones Embassy High speed road Land slide Electrical interference Radius Proximity to existing Data Centres Target price City centre Labour
- 25. SONAR Site assesment phase Utilities Power grid Gas grid Alternative power sources Fibre Risks Flood risk Airports and flight path Petrol station & fuel storage Seismic zones Nuclear plants Military zone Embassy Hazard activity Rail & Subway High speed roads Mining Land slides Positive attributes Fire service Hospital Positive indicatives Data Centres Satellite antennas port Landing stations Potential Interferences Archaeological known areas Residential zones Easements High crime areas Fibre Flood zone Residential zone
- 27. CBRE Data Centre Solutions Q&A 27 CBRE DATA CENTRE SOLUTIONS ’WITH DATA CENTRES - KNOWLEDGE IS POWER’
Editor's Notes
- THINK ABOUT THE OLD LP – TODAY ALL DIGITAL (Same product different delivery) – Environmental impact…positive Overview Gauged by colocation activity – the third-party outsource market - in the four major “FLAP” cities of Frankfurt, London, Amsterdam and Paris, the European data centres sector is at an all-time high and we anticipate further growth. This is predominantly driven by the large cloud computing companies which account for over 80% of all colocation take-up, and are therefore shaping the entire sector in Europe as well as driving the actions of data centre investors, developers and operators. Market driven by technological advancement Technological development will ensure that data, and hence data centres, become ever more critical in the operations of a growing range of businesses. Some estimates suggest that the daily amount of data generated by IoT devices is doubling every forty weeks. There is a common misconception that this data is just out there somewhere in “the Cloud”. In reality the Cloud consists of a series of physical servers stored in data centres, which are purpose-built or specialist-fitted buildings in major global cities. So as the quantum of cloud computing increases, so does the demand for data centre capacity. New Norm 100-120MW – 2018 175MW+ To date, demand has been mostly driven by the large US cloud providers but in 2019 we also expect Chinese providers to make a more substantial contribution, having so far had limited involvement in this market. M&A will play a key role The data centres sector is characterised by a very high level of M&A activity. Investors from across the spectrum, including North American pension funds, Asian sovereign wealth, private equity, infrastructure funds, institutional capital are all looking to take advantage of this asset class. A virtuous mix of increased investor appetite, developers looking to expand, and sellers able to realise high-values for their platforms or assets will continue through 2019. As a result we expect to see more platforms acquired in primary and secondary markets, especially those which provide rapid entry into sought-after locations.
- Supply keeping pace Such strong market activity has provided the foundations for large-scale data centre development across Europe. CBRE forecasts that 2019 will mark the third year running in which the capacity of the four major European markets has grown by over 15%. Put another way, this means that over one-third of all colocation supply in the core FLAP markets has come online in the past three years alone. In 2019, the US developer-operators that made an initial move into Europe in 2018, including CyrusOne, Iron Mountain and ServerFarm, may look to reinforce their dominance by growing both organically and through acquisition, initially in the core FLAP markets. There will be challenges, however. There are major constraints on power availability in some jurisdictions, and freehold sites in prime location are scarce. Those developers which show some degree of flexibility in their approach are likely to have most success in developing new sites.
- 2018 between 5-10 / 2019 +10 2018 3 / 2019 +10 2018 4 / 2019 +10 2018 1 / 2019 +5
- 2018 between 5-10 / 2019 +10 2018 3 / 2019 +10 2018 4 / 2019 +10 2018 1 / 2019 +5