Data Centers in The Heartland

The "server farm" jokes were inevitable when Google announced it would build a huge data center in Iowa. To many in the media, Iowa seemed an odd place for a high-tech IT facility.

But not to Mark Kittrell, vice president of development of the TEAM Companies, which made Iowa the launchpad for a network of data centers in second-tier markets of the upper Midwest. Cities like Cedar Falls, Iowa and Fitchburg, Wisconsin wouldn't fit neatly into the data center site location map from the dot-com era, when facilities clustered around fiber hubs in major Internet markets.

But broadband penetration has redrawn the map. And in the Midwest, TEAM saw an opportunity to build a data center business focused on growing markets and strong community connections. While perhaps not thought of as a go-go Internet hot spot, Iowa offers low operating costs, solid infrastructure and few terrorist attacks and natural disasters.

"The secondary markets in the U.S. were safe, relatively inexpensive places to do business," said Kittrell. "Our focus was learning whether customers in secondary markets would endorse the idea of local data centers. We built a data center, and the good news is that in two years, we filled it."

TEAM hopes to fill more centers. Its new Fitchburg data center is the first of five new facilities TEAM intends to build in Midwest markets over the next five years. It is among the regional providers experiencing strong growth, which in turn has prompted interest from the private equity sector. ABRY Partners has bought Houston's CyrusOne and Hosted Solutions of North Carolina, while Managed Data Holdings has acquired Data393 of Denver and InteleNet of Irvine, Calif.

Different Approach Needed

Operating a data center business in smaller markets like Cedar Falls and Fitchburg requires a different approach than in major markets such as New York or northern Virginia, according to Kittrell. "A couple of things are fundamentally different," he said. "In a lot of cases, the first thing we do is spend time with local economic development and find out what kind of market this is. We're really looking for vibrant economies in their own right. Because these markets are smaller, (business owners) tend to be pretty community-minded people. They don't want to build their own data centers, but they don't want to go far."

TEAM focuses on a specific tenant base - service providers and multi-tenant colocation providers. The company's first facility, built on spec, was a 24,000 square foot facility in Cedar Falls. Last September TEAM opened a 55,000 square foot data center in Fitchburg, with CDW Berbee as the anchor tenant.

"We've got a track record with a couple successful centers," said Kittrell. "These communities are waking up to this."