CyrusOne datacenter operator expands operations to Silicon Valley and Amsterdam.

Dallas-based CyrusOne, a real estate investment trust operating colocation and wholesale data centers across the US, Europe, South America, and Asia, is expanding its geographic footprint significantly. The company has reached an agreement to purchase land for a planned data center campus at Agriport A7, a 100-hectare business park in Middenmeer, the Netherlands, approximately 40 miles north of Amsterdam, and has also acquired land for its first Silicon Valley data center. This expansion follows CyrusOne's December acquisition of European hyperscale data center provider Zenium Data Centers for $442 million, which added four data centers evenly split between London and Frankfurt with combined colocation space of 260,000 square feet and 49.3MW power capacity.

In the Netherlands, CyrusOne has options to purchase up to 33 hectares (about 81 acres) in parcels "as demand dictates," with the location offering access to inexpensive and reliable power and proximity to existing hyperscale developments, including Microsoft's $2 billion facility that has been under development in the park since 2014. The company plans to eventually build six 45MW data centers at the site for a total capacity of 270MW. CEO Gary J. Wojtaszek told investors during a quarterly earnings call that the company is "launching into the design and development phase, so that we can basically pitch these solutions to our hyperscale customers that need that type of scale in the Netherlands," indicating the planned data centers will be custom-built for hyperscale customers.

Regarding its European strategy, Wojtaszek indicated that expansion efforts will focus on Southern Europe in the coming period. "We've done a lot in Europe over the last year, but we're going to continue to look for additional capacity," he said. "Right now, we're predominantly located in some of the markets in the north of Europe, and we're going to be looking at expanding into the south. We have nothing in France. We have nothing in Spain. Nothing in Italy. Those are markets that we will continue to look into to build out that platform."

In the United States, CyrusOne recently acquired a 15-acre property in Santa Clara, California for its first Silicon Valley data center, with Wojtaszek noting that the search had been lengthy due to the area's high real estate prices. "Santa Clara was the last remaining location in the US where we were looking for capacity that we didn't have," he explained. "It's one of the largest data center markets in the country, and we've been looking for the last several years. We've had other properties under contract that we couldn't get the yields to work out, given the price that the sellers had wanted on this. So the pricing in that market is probably 50 percent to 60 percent higher than what we see in the rest of the portfolio." The company has also recently acquired land in Northern Virginia and the Dallas area and is scouting a location in San Antonio, where available space at its existing facility has run out.

While cloud enterprise adoption and data growth from streaming media and connected devices continue to drive demand, Wojtaszek emphasized artificial intelligence as the next major demand driver for data center space. "AI demand is starting off at a very small base right now, but it's growing dramatically," he said, pointing to NVIDIA's GPU chip adoption as a leading indicator. "That trend has been taking hold in that company for almost two years now, and they have a dominant position in those chips, and those are predominantly going into some of those [AI] applications today." He noted that other semiconductor companies are now positioning themselves to compete in the GPU market and that while AI applications are currently proliferating, "that still hasn't manifested itself in broad data center demand, which we think is absolutely going to occur." CyrusOne currently operates more than 45 data centers.