Rich Miller
February 1, 2017

A flurry of data center acquisitions in January highlight the industry’s growing focus on regional markets, as service providers and investors bought up facilities in second-tier cities like Cleveland, Pittsburgh, Salt Lake City, Boston and Louisville.

The month’s M&A action reflects our prediction that edge computing will create opportunities in regional markets in 2017. As the potential demand drivers for edge computing – which include the Internet of Things, virtual reality and connected cars – gain broader market acceptance, service providers will move to build or acquire storage and network capacity outside the major data center markets.

Here’s a look at the data center M&A action from the month of January:

H5 Acquires Cleveland Data Center From ByteGrid: Denver-based H5 Data Centers acquired the Cleveland Technology Center in downtown Cleveland, Ohio. The 333,215 square foot data center was previously owned by ByteGrid, whose employees working at the site will join H5. ByteGrid and H5 pursue a similar strategy, seeking opportunistic deals for buildings with existing tenants and an “upside” of space for development.

DataBank Buys Cleveland, Pittsburgh Sites from 365: What’s up with Cleveland? In the month’s second deal in the Ohio city, Digital Bridge Holdings’ DataBank unit acquired data centers in Cleveland and Pittsburgh from 365 Data Centers. Digital Bridge has raised over $6.3 billion of debt and equity capital used to acquire and invest in the development of communications infrastructure businesses. The deal came just 11 days after DataBank’s most recent acquisition …

DataBank Buys C7 Data Centers: On Jan. 17 DataBank acquired C7 Data Centers, which has built a niche as the leading colocation provider in Salt Lake City. C7’s three interconnected data centers in the Utah market become DataBank’s first footprint in western US. It’s possible that DataBank owner Digital Bridge is just getting started, as it is reported to be working on a deal to acquire Vantage Data Centers

Redbird Capital Invests in Compass: Private equity firm Redbird Capital and the Ontario Teachers Pension Fund are the new investment team, with Compass founder and CEO Chris Crosby and the management team retaining an equity stake and continuing to head the company’s operations. Redbird is also an investor in Tierpoint, which like Compass has focused on building data centers in secondary markets across the U.S. Compass recently began building a data center for Tierpoint in Dallas. Just two weeks after the investment, TierPoint announced that Compass would build a $20 million expansion at its Nashville campus, where Compass built the first data center for Windstream (which was subsequently acquired by TierPoint).

QTS Acquires Dallas Large Dallas Data Center: As we’ve previously noted, QTS Realty has become the master of the Internet-scale retrofit, finding former industrial facilities with sturdy infrastructure and transforming them into massive data centers. It has applied this template to an expansion of its Dallas footprint, investing $50 million to buy a 260,000 square foot data center in Fort Worth from insurer Health Care Services Corp. The existing building has 8 megawatts of power, but the property can accommodate another 60 MW of capacity.

Central Colo Enters Northern Virginia Market: The colocation provider acquired the Tyson Technology Center in Vienna, with an affiliate buying the building from the Meridian Group for $96 million. The property consists of a 200,000-square foot Tier 3 data center and an 80,000-square foot office building, and is 75 percent leased. The acquisition comes just four months after Central Colo unveiled new expansion-minded investors in Safanad Capital, a global investment firm, and San Francisco private equity firm Industry Capital.

Carter Validus Buys NaviSite Boston Site: Carter Validus paid $37 million to acquire a 153,000 square foot facility in Andover, Mass. , which is fully occupied by managed hosting provider NaviSite. The deal aligns with the Carter Validus strategy of acquiring leased data centers and healthcare facilities.

Peak 10 Buys Louisville Data Center: Peak 10 was an early player in the second-tier data center market, building out a network of colocation facilities in the Southeastern U.S. Under new CEO Chris Downie, who previously led Telx, Peak 10 appears to be entering a new phase of deal-driven growth to build upon its strength in regional markets. On Jan. 9 the company bought a 33,000 square foot facility that doubled its footprint in Louisville.

http://datacenterfrontier.com/data-c...ional-markets/