We’ve all been inundated with talk about the era of Big Data. But these last few weeks, we felt its impact in dramatic fashion.
Just hours after the explosions at the April 15 Boston Marathon, the FBI had amassed10 terabytes of data that four days later led them to the two suspects. Big Data is all about aggregating data sets into big-data algorithms that can see patterns and in the case of Boston, the data was cell phone tower call logs, text messages, social media data, photographs and video surveillance footage to quickly pinpoint the suspects.
Think about how long the investigation might have taken without the crowd-sourced information which had ordinary people sending the authorities thousands of pictures and videos.
In our industry, we recognize the era of Big Data because it's had a huge impact on real estate. Christian Belady of Microsoft projects that annual global spending on data center construction will increase to $78 billion by 2020 with the US representing about $18 billion of that total.
Looking ahead, the demand for data centers is secure. It’s being driven by the trend towards backing up data in the proverbial cloud, the growth of online shopping (it grew 14 percent between 2011 and 2012 to $42.3 billion in sales), the advent of electronic health records, and all the time we spend posting, pinging, tweeting and liking on social media.
McKinsey & Company predicts a 40 percent growth annually in the data being generated. Some datasets within the federal government are measured in petabytes, which are one million gigabytes or 1,000 terabytes. Among companies of more than 1,000 employees in 15 out of the economy's 17 sectors, the average amount of data is a surreal 235 terabytes. That's right -- each of these companies has more info than the Library of Congress.
It’s estimated that the amount of global data will reach 40 zettabytes (ZB) by 2020 (that’s over 40 billion terabytes), an amount that exceeds previous forecasts by 5 ZBs. That represents a 50-fold growth from the beginning of 2010 and that number is probably a lowball.
So, why all this data? Because companies are hoarding it. Like hanging on to clothes that don’t fit, most of America’s premier companies are starting to do essentially the same thing with data. The reason? They recognize the opportunity cost of not collecting data. Often times, the chance to get data only happens once--when it occurs. This is true whether it’s from video surveillance, pictures from a cell phone, people browsing their on-line store, GPS tracking information coming from a car, recording tweets or information collected through scientific research. So, if you don’t yet know what to do with all that data, put it in storage. Today, less than 1 percent of the world’s data is analyzed.
Data In the Distance
Looking ahead, we see no signs of abatement in the demand for data centers.
In 2012, we saw the institutions, REITs and private investors flocking to the asset class because of the long term leases, substantial tenant investment, and tenant credit profiles. As companies look to cut costs and lighten their balance sheets, we will also sale-leasebacks which will allow them to deploy their capital in their digital infrastructure rather than bricks and mortar.
As senior vice president of The Alter Group, Kurt Rosene spearheads the firm’s business development in the Western United States,including corporate services, leasing and build-to-suit activities.