Hyperscalers still need them to meet fast-growing demand, and smaller enterprises depend on their specialist services. As Exhibit 1 shows, co-location companies will continue to have a strong position in the market. Real-estate companies, for example, could increasingly build or lease out space for their tenants to equip and use.īut this possibility does not mean that the sector lacks value-creating investment opportunities. Moreover, if this strategy means that co-location companies will no longer be long-term owners and operators of data centers but more akin to developers, the market will open up for other competitors. As a result, they are signing shorter-term contracts and are often in a strong position to demand favorable leasing terms. These have long been major customers for co-location companies but also continue to own and build their own world-class centers. In addition, the operating margins of co-location companies are under pressure from prominent cloud vendors, including Amazon Web Services and Google Cloud. More specifically, multiples and forward price-to-earnings ratios for co-location companies have been relatively high, boosted by competition to snag the diminishing number of potential acquisition targets for private investors and for co-location companies keen to expand. First, higher interest rates raise the cost of funding deals, though this is not limited to only data centers. Several factors could limit this trend, however. 2 “Private equity is driving a boom in data center M&A deals,” Synergy Research Group, June 22, 2022. Their share increased to 65 percent from 2019 to 2021 and to more than 90 percent in the first half of 2022. From 2015 to 2018, private equity buyers accounted for 42 percent of the deal value. In the first half of 2022, there were 87 deals, with an aggregate value of $24 billion. In 2021, there were 209 data center deals, with an aggregate value of more than $48 billion, up some 40 percent from 2020, when the deals were worth $34 billion. According to NAREIT, as of October 31, 2022, the dividend yield stands at 3.14 percent, and the 2021 total return at 25.47 percent. 1 Relatively few data center operators remain publicly owned. Data centers have attracted the interest of investors, often because of the steady, utility-like cash flows and risk-adjusted yields. The latter lease out the space and typically provide network capacity and power, as well as the cooling equipment that keeps down server temperatures. Its engineered advantages, colored conductors, and cost savings offer a competitive edge when bidding on new projects.This article is a collaborative effort by Srini Bangalore, Arjita Bhan, Andrea Del Miglio, Pankaj Sachdeva, Vijay Sarma, Raman Sharma, and Bhargs Srivathsan, representing views from McKinsey’s Technology, Media & Telecommunications Practice.ĭata centers are typically owned and operated either by big companies (such as cloud vendors, banks, or telcos) for their own purposes or by co-location companies. Once installed, contractors are loyal to this prefab twisted cable and its repeatable results. ServicePlex ® is an ideal choice for data center applications. The combination of ServicePlex ® and "true color" conductors makes for easy phase identification and creates a clean, visual design that’s perfect for both contractors and data center operation managers. During installation, the prefab ServicePlex ® also used 75% fewer cable ties, requiring only one tie every six feet instead of four. ![]() The prefab single conductors cut down the number of pulls and allowed the contractor to use smaller tray, saving on labor and material costs. ![]() Service Wire’s 500 Kcmil ServicePlex ® was easily run overhead in tray from the electrical service panels to the data center’s customized tap boxes, powering the mission critical servers. INSTALLING SERVICEPLEX ON THE SERVER FLOOR However, the single or parallel conductors commonly used to distribute power can be cumbersome to set up and install.Ī data center in the Carolinas wanted something different-a cable that better fit the company’s intricate design and confines of the server floor. When it comes to powering data centers, tech giants need reliable cable that can keep pace with their processing speed and efficiency.
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