CyrusOne Expands High-Density Colo Centers

Cyrus One is expanding its data center campuses in Houston and Dallas, citing strong demand for its colocation services. The Houston-based company specializes in high-density colocation, and says it is seeing customer growth in both of its core Texas markets.

Cyrus One said last week that it has leased an additional 81,000 square feet of space in Dallas adjacent to its existing facility in Lewisville. The company has also recently commissioned two new pods totaling 25,000 square feet in its existing 125,000 square foot Houston campus. Upon completion of its new Dallas space, Cyrus One will have 310,000 square feet of data center facilities across five facilities, including two in Houston and three in Dallas.

“Despite the economic downturn, our momentum within these markets continues to thrive, as companies consolidate their national data centers in a colocation facility to minimize overall infrastructure costs and avoid significant capital expenditures,” said David Ferdman, chief executive of Houston-based Cyrus One.

But beyond that, the company's two primary markets are very different, Ferdman said.

In Houston, Cyrus One's customer base reflects the local economy, with more than 50 percent connected to the energy industry, including oil and gas companies, pipeline operators, oil field service providers, and electric utility and power generation companies. About another 20 percent are technology companies.

In Dallas, many customers are global companies seeking a presence in the Texas market. "We are seeing great demand in Dallas, but a lot of it is not from the Dallas area," said Ferdman. "We've been successful without really going into the local market. If you have someone in Europe or Asia, it's easier to convince them to move the equipment from there to Dallas rather than Houston because of the perceived weather risks."

Cyrus One's Houston facilities have remained online throughout Hurricane Rita in 2005 and Hurricane Ike last year, Ferdman said, noting that the facilities are designed to withstand category 5 storms. "But if you're overseas and looking at the reports and reading the news, you're going to be more comfortable moving from Europe to Dallas," he said. 

The new space in Dallas is in the Convergence Technology Center in Lewisville, a 185-acre campuswith power from two independent power grids, fed by three separate substations. Cyrus One has pre-sold about half of the new space in Dallas, Ferdman said.

"We really don't build on spec," he said. "We're never going to get too far ahead of ourselves."

Cyrus One is owned by ABRY Partners, a Boston-based private equity firm that bought the company in 2007 and has backed the data center expansion program.