The Daily T1R – Feb 11, 2009
By Jeff Paschke

Specialty colocation provider CyrusOne is expanding in Dallas and Houston. CyrusOne is adding 81,000 square feet to its existing 80,000-square-foot facility in Lewisville, Texas (a suburb of Dallas). CyrusOne is also adding 25,000 square feet to its existing 125,000-square-foot Houston campus. Upon completion of these expansions, CyrusOne will occupy approximately 311,000 square feet of datacenter space in Texas between five facilities, including two in Houston and three in Dallas./p>

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 estimates that CyrusOne will average 200 watts per square foot in the expansions, with 'peak' cabinets supporting up to 20kW. CyrusOne datacenters are also architected to a 2N level of power and cooling 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.

T1R thinks expansions by CyrusOne in two Texas markets shows the continued demand for datacenter space in Texas. Dallas is one of the top six multi-tenant datacenter markets in the United States and T1R has seen datacenter space moving quickly in Dallas. The Dallas-Fort Worth-Arlington Metropolitan Statistical Area (MSA) is the fourth largest in the United States with a population of 6.1 million. Dallas continues to see strong growth as Dallas multi-tenant datacenters are home to many shared and dedicated hosting providers. Dallas also has a well-diversified economy, with strong enterprise demand for both wholesale and colocation datacenter space.

In mid-2007, CyrusOne was acquired by ABRY Partners, a Boston-based private equity investment firm. These expansions in Dallas and Houston by CyrusOne demonstrate that ABRY represents a funding source for major expansions to take CyrusOne to the next level in the face of continued financial turmoil and tight credit, making it extremely difficult to raise traditional bank financing for building datacenters.