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Seeking safety after the storm Businesses with no backup plan reach out to data centers to fortify IT needs

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Eric Shepcaro says Telx was inundated with calls from noncustomers who had lost access to their data storage during Hurricane Sandy.
Eric Shepcaro says Telx was inundated with calls from noncustomers who had lost access to their data storage during Hurricane Sandy. - ()

As Hurricane Sandy bore down on New Jersey late last month, data center operators reinforced their facilities with generators and extra staffers, aiming to avoid costly shutdowns and assure clients that their servers were safe.

But once the storm had passed, New York-based Telx was inundated with calls from non-customers who had lost access to their own data storage — and had no backup plan — now looking for a place to set up shop, CEO Eric Shepcaro said.

"They were actively calling us, because they knew we were operational, to determine how quickly we could get them operational in our New Jersey or New York facilities," including sites in Clifton and Weehawken, he said.

The "prospect calls" fielded by Telx may have been an immediate sign of things to come in the storm's aftermath. While New Jersey's 3 million-square-foot data center market is already one of the strongest in the country, operators and brokers say it could find even more demand from firms looking to fortify their IT needs and establish contingencies for future disasters.

"Companies are clearly going to step back now and look at their digital infrastructure," Shepcaro said, citing the need to ensure that they have "backup and recovery plans" in place. And for those looking to "diversify" with multiple data center locations, he added, "New Jersey was always attractive … It becomes even more attractive, I think, since Sandy."

The prospect of firms moving their data center requirements from Manhattan to the Garden State is not as likely, experts say. Sumner Putnam, a vice president in Jones Lang LaSalle's data center practice, said that "for the most part, the folks that are there on Manhattan have to be on Manhattan" because of their business needs. He pointed to users — like government agencies and telecommunications providers — that require such close proximity.

But in both states, smaller firms that don't already outsource their IT needs may think again after flood waters filled the basements of their office buildings late last month, said Sean Brady, a senior director at Cushman & Wakefield and co-founder of its data center advisory group. In many cases, especially in lower Manhattan, that meant the loss of generators and access to their digital infrastructure.

"And then, if the building's condemned, or you can't go back into the building for days or weeks, you're essentially out of business," Brady said. "I'm not quite sure what the solution is, but I would be willing to bet that everybody is going to have a backup server somewhere. And that never really was thought of before."

Putnam said New Jersey data centers stand to benefit from any new requirements in the region. He also noted that "the trend already has been outsourcing — whether it's just the IT closet or in some cases larger requirements ... But I definitely think we're going to see this phenomenon continue on, and possibly, because of the storm, accelerate."

Equipped with heavy-duty generators and detailed emergency plans, New Jersey's data centers seemed to fare well during Hurricane Sandy, Putnam and Brady said. Shepcaro, the Telx CEO, said the company's Clifton and Weehawken centers never lost power between its utility service and backup generators.

"It's critical that we have no down time for our customers," he said, noting that the company's New York hubs also stayed online. "Many of our clients are operating large communication networks which need to be up and operational, particularly during crises and disasters."

Operators say it was equally important to have all hands on deck for customer service and communication before, during and after the storm. David Caron, senior vice president of portfolio management for Digital Realty Trust, said the company started advising clients of its preparations as early as Oct. 25, about four days before the storm.

"You start as early as possible in communicating," he said. "And you over-communicate, rather than under-communicate, so that the customers get a steady stream of updates and information about what we're doing to prepare."

Caron estimated that between 150 and 200 employees were "dedicated to this event." Telx, meanwhile, "had our regular staff and incremental staff that essentially slept in our facilities for the week. So they were there for the duration, both to maintain all of the infrastructure but also to take customer calls and customer inquiries," Shepcaro said.

New Jersey's data center market should have no problem meeting any continued demand, insiders say. Brady, of Cushman & Wakefield, said third-party providers have leased or launched millions of square feet of space here over the past two years, adding that there are "a million square feet worth of deals in the pipeline."

Telx and Mountain Development Corp. are currently building their second data center in Clifton. Shepcaro said the 200,000-square-foot facility will be complete next quarter, giving the company a third location in the state.

E-mail to: joshb@njbiz.com
On Twitter: @JoshBurdNJ

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