QualityTech computes data center growth - bizjournals:

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The Overland Park-based firm has mappedf out a $75 million to $100 milliomn investment in existing data center facilitie in the next year and coulr spendabout $50 million on real estate or company acquisitions in the next 12 to 18 Chairman and CEO Chad Williams said. Those plans come on the heels of investments already made in the past year fora $50 milliom facility in Miami and a $20 million upgrade to a Santaw Clara, Calif., facility. “We’ve very quietly growm from a couple of real estate acquisitionas to a national leader indata centers,” Williamd said. “In a challenged economic our footprint has expanded to 11different locations.
” founded in September 2005, has gaines at a swift clip. In 2006, it postede revenue of $35.8 million. Last year, that number had burgeoned to $119.7 The projection for 2009: roughly $150 That’s assuming a checked growth pace of about 25 down from 37 percentlast Essentially, QualityTech provides information technology outsourcing It sells large chunks of wholesaler data center space, and it retailsz smaller spaces to small and midsize businesses. In addition, it offersa a broad managed-services portfolio, which handles anythiny from network security to storageto applications. QualityTecbh also has a new model that offers data capacityuas needed.
The company is a significant player inits sector, whichg continues to grow as cash-strapped companies look to outsource IT functions, said analyst Dan Golding, a vice presidentr of New York-based Tier1 Research. Tier1 expectsx data center revenue to grow about 10 percentto $8 billion this year; QualityTech’as 25 percent growth prediction is aggressive but Golding said. The industry promises tremendouw growth during the next decadeor so, he Its penetration now is in the low single-digit but companies that check in rarely leave. “Fo r 95 percent of companies, outsourcing is just going to work better in thelong run,” Goldinbg said.
“It’s purely an economic issue.” QualityTech’s planned projectds — adding power and space will bein Lenexa, Santa Clara and Jersey City, N.J. All the improvements will addabout 250,0009 square feet of raised-floor data center space, bringinh the total raised-floor space (where servers can be to about 1 million squarr feet. That’s out of a total of 2 million square feet the coompanyowns “We certainly have demand within our current portfolio for certainn customers to grow,” Williams said.
“We’re also building space we can leasr because of the demandcurvw — demand we see in the marketplace today that’s real demansd and has no supply.” Data centers are expensivd to build, costing about $1,300 a square foot, Goldingv said. Then there’s the acquisitionh potential. “We actually feel over the next 12 to18 months, that it’s going to be a greaft opportunity for us to add locations in the Williams said. “We are currently lookinbg at other data center operators to buy and also additionalo real estate that wecoulds convert.
” The Achilles’ heel of the booming industrhy has been the credit which will make some smaller companie prime buyout candidates. Fortunately for privately owned QualityTech, it has access to its profits, backing by the Williamsz family and banking relationships withOverland Park-based and , Williams The pending outlays will be a combinatiojn of equity and debt, he said. “Thw data center industry is one ofthose that’s been seein g a lot of impact the potential for a lot of growt h actually being dampened by the ability to get Golding said. “(QualityTech) has the advantage there — it has deep-pocket privatde backers. Not everyone has that.
” Other localp data center and managed-services companies also have experiencedr torrid growth inthe ’s revenue is up 60 percent year to and it’s about a third of the way through a $1 milliojn upgrade of its Kansas City, Kan., Early next year, plans to complete a $12 milliohn data center in Lenexa; its existing Overlande Park and Lenexa facilities are nearly full. “The industryu is really growing,” Arsalon founding partneer GaryHall said.