The Houston Chronicle – July 24, 2009
By Purva Patel

Walking through the CyrusOne's three-building campus is like a walk through the evolution of technology. Each addition to the company's buildings houses smaller but more powerful servers, higher floors and more air conditioning.

It's also a testament to the company's growth. The privately held company won't disclose revenue figures, but its recent building spree speaks to its advances.

A 94,000-square-foot data center in west Houston marks the company's third new data center this year and brings its total number of centers to seven.

The company is home to servers for more than 200 companies at its data centers in Houston, Austin and Dallas.

“We never overbuild and we don't build on speculation,” said David Ferdman, the company's CEO. “We build enough to satisfy demand and leave ourselves room for additions. But we always have a client before we build.”

As businesses become more automated and reliant on the Internet and computers, they also need more servers to process their data. And many are opting to house them miles away as capital expenditure budgets tighten.

The data center colocation industry has been growing at an annual clip of about 20 percent in terms of revenues, said Daniel Golding, vice president and research director of New York-based Tier1 Research. That's down from 25 percent three years ago, but healthy, given the recession, he said.

“It's growing pretty sharply, mostly because of the economic uncertainty,” Golding said, noting that many businesses don't currently have the budgets to build out large data centers or can't get loans for the construction. “It's strange folks have been building these for so long, given how expensive they are.”

That's not to say the credit crunch hasn't affected companies that specialize in data centers, which can cost $100 million to build, given the costly systems they require.

“But CyrusOne is backed by a private equity firm, which is very useful to them because they have access to capital,” Golding said.

The company was acquired in 2007 by Boston-based private equity firm ABRY Partners. While few of the company's competitors have expanded locally, Houston-based The Planet opened a second colocation center in Dallas this summer. It secured a rare line of credit late last year. “But we tend to have different types of customers,” said Yvonne Donaldson, a spokeswoman for The Planet, adding that many of its clients are telecommunications companies.

CyrusOne's customers include large energy companies such as Dynegy, Halliburton and Marathon Oil.Aside from servers sitting inside rows of chain link cages, the company's campus off the Southwest Freeway also houses duplicate trading floors and emergency offices for some of the city's largest energy companies.

Designed to withstand a Category 5 hurricane, the buildings have concrete walls, metal shutters that drop as a hurricane approaches, and enough generators and fuel to keep the place running for 10 days.

“We're not a volume shop. Everything here is mission critical,” Ferdman said. “That's why we have to be sure we're always on.”