The Daily T1R – April 2, 2009
By Jeff Paschke

Specialty colocation provider CyrusOne is expanding again in Texas, this time to the city of Austin. CyrusOne has signed a long-term lease agreement to acquire real estate to build a 50,000-square-foot datacenter in Austin. The new facility is located in the 550-acre Met Center business park campus located in southeast Austin. The Met Center has multiple substations with access to multiple power grids with a total campus power capacity of 400MW. This new Austin datacenter is planned to open in Q3 2009. CyrusOne is bringing two 'anchor' clients from its energy industry roots, which will allow CyrusOne to enter this new market for the company with positive operating income.

This new Austin datacenter follows expansions by CyrusOne in both Dallas and Houston that were announced earlier this year. Upon completion of expansions, the company will have six facilities totaling approximately 380,000 square feet in Texas, including two facilities in Houston, three in Dallas and one in Austin.

CyrusOne's niche is high-density colocation and is one of the few successful colocation pure-play providers (i.e., no or limited interconnection and managed hosting). T1R believes that CyrusOne will average over 200 watts per square foot in its new Austin facility, with 'peak' cabinets supporting up to 20kW. CyrusOne datacenters are also architected to a 2N level of redundancy, which is unusual, both due to the expense involved, and not to mention that most customers don't actually demand that level of reliability. CyrusOne, however, has a very specific market – energy firms (including some of the world's largest) demanding high density and ultra-high uptime while performing geological simulations, a key aspect of oil exploration and discovery (CyrusOne's Texas location is no coincidence). At the same time, CyrusOne has been working to diversify its customer base by adding healthcare and financial customers.

In mid-2007, CyrusOne was acquired by ABRY Partners, a Boston-based private equity investment firm. This new datacenter in Austin, along with earlier announced expansions in Dallas and Houston by CyrusOne, demonstrate that ABRY represents a funding source for major expansions to take CyrusOne to the next level.

With its private equity backer and owner, ABRY Partners, T1R thinks CyrusOne has an advantage that will permit the company to continue to expand and increase market share against other non-public competitors who are finding it difficult to raise financing to expand. T1R thinks the winners during this economic downturn are the datacenter providers who can continue to add inventory in a datacenter market that continues to have a shortage of new supply while demand continues to remain strong.