DuPont Fabros Planning Massive Toronto Data Center

DuPont Fabros Technology, the wholesale data center provider that leases lots of space and power capacity to the likes of Microsoft, Facebook, and Yahoo, is expanding into Toronto, a growing data center market the company says is underserved by data center providers.

The geographic expansion is part of a broad series of strategic changes the technology-focused real estate investment trust is making.

With a new CEO on board – former NTT exec Christopher Eldredge took over the helm from DFT’s founding CEO Hossein Fateh in February – the company is now providing more power density and infrastructure redundancy options than it has before and offering full-service leases in addition to triple-net leases, which used to be its only available option. It has also stopped pursuing retail colocation business, an initiative it announced last year, choosing instead to double down on its traditional bread-and-butter wholesale data center model.

Toronto is the furthest along, but DFT is also going through the site selection process in the Portland and Phoenix markets. In Toronto, “we’re in the process of securing the land and doing the design,” Scott Davis, whom DFT recently promoted to CTO, said in an interview.

DFT currently has 12 data centers in four US markets: Northern Virginia, New Jersey, Chicago, and Silicon Valley. The facilities total 3 million square feet and nearly 270 MW of critical power capacity.

Its two biggest customers are Microsoft and Facebook, each driving about 20 percent of annualized rent revenue. Rackspace is third biggest, driving about 11 percent, and Yahoo is fourth, driving 7 percent of revenue. Other customers include Dropbox, Symantec, Server Central, and UBS.

The company chose Toronto after an extensive search and analysis of supply and demand dynamics across top markets in North America. Ontario’s capital, the fourth largest city on the continent by population, has robust demand for data center space, and especially wholesale, Davis said.

“Dallas (for example) is a very good market but pretty saturated from a provider standpoint, whereas Toronto has very few providers,” he said. “It’s actually underserved. We’d rather be in early to an emerging market than be the last ones into an established market.”

There are a few retail colocation providers serving Toronto, and the wholesale providers that have gone into the market did well there, he said, citing competitor Digital Realty Trust as an example. Digital, Davis said, “sold pretty quickly, but it wasn’t really large-scale.”

Exact capacity DFT is bringing to the Toronto market is still undetermined, but the company has no plans of deviating from its model of building massive campuses whose scale enables it to drive down the cost for its customers.