Metro Atlanta’s data centers put region at center of discussions over cyber security concerns

By David Pendered

As computer hacking becomes a seemingly everyday occurrence, metro Atlanta is at the center of discussions because of its ranking as one of the nation’s major data center and home to one of the world’s largest data centers.

Once the domain of science fiction, iris scans now are used to secure data centers operated by QTS. Credit: http://www.qtsdatacenters.com

A new report from CBRE, the real estate firm, lists Atlanta among the nation’s seven major data centers. One company operates 75 percent of metro Atlanta’s data capacity – Kansas-based QTS, according to CBRE’s report.

Data centers are the future of the digital world. They host cloud computing technology and enable companies to outsource their data storage. In their infancy, some 20 years ago, they often were called “dot.com hotels.” One operated in what appeared to be a shuttered office building on Marietta Street, near the CNN Center. A call button summoned a guard to open the front door.

That was then.

Security at the QTS data centers is straight out of not-so-long-ago science fiction.

Iris scanners confirm the identity of all those who enter a secured area. Fingerprints are checked. Cameras are prohibited without prior approval. Cell phones work, but only in only some parts of the data centers, according to QTS.

The business is so competitive, and secretive, that not even the talk at QTS’s earnings conference call on Feb. 22 provided much information about the company’s clientele – and, therefore, the type of data stored at QTS data centers.

Metro Atlanta has emerged as one of the nation’s leading data centers in part because of the comparatively lower cost of electricity. Credit: CBRE

QTS evidently is losing a client at one of its data centers in northern Virginia. One of its facilities in the area is secured to meet federal information technology compliance standards. The security level also meets the demands of the health information and financial services sectors.

Here’s a snippet of the Feb. 22 conversation:

• Chad Williams, QTS chairman/CEO: “The client has moved out, and we are in a bit of a repositioning of the space. Of course it is fully built out. It is build [sic] to a certification standard that is fairly unique. And with the location of it in Northern Virginia, the proximity of it to the federal marketplace, and quite frankly, some focus from our internal government services group, the team has made a pretty compelling case to say give us some time.”
• Dan Bennewitz, QTS COO of Sales and Marketing: “As Chad said, looking at government clients who value the high security and the skiff aspects of that at the right price point, we will extend a long-term lease. In parallel, we are looking – if there is a short-term leasing opportunities for requirements that are two years or less, is another option that we are pursuing in parallel.”

The QTS data center near Downtown Atlanta has its own Georgia Power substation to serve the energy needs of a facility that’s almost the size of Lenox Square. Credit: qtsdatacenters.com

QTS operates 25 data centers in the United States, Canada, Europe and the Asia-Pacific region, according to its March 1 filing with the Securities and Exchange Commission. The company has two facilities in metro Atlanta.

The one west of Downtown Atlanta is nearly the size of Lenox Square. At 970,000 square feet, it’s among the largest in the world, according to a report by trade publication datacenters.com. The center has its own Georgia Power substation.

The QTS facility in Suwanee measures 370,000 square feet. That’s the size of two Walmart superstores, the mega-stores that sell merchandise and groceries.

The future of the two centers in metro Atlanta is anything but certain, according to QTS’s annual report to the SEC. The company leases the facilities and the rent accounted for 41 percent of QTS’s entire leasing budget, as of Dec. 31, 2016.

Regarding facilities in Atlanta and Suwanee, and northern Virginia,, the annual report noted:

• “[W]e are particularly susceptible to adverse market conditions in these areas. In addition, other geographic markets could become more attractive for developers, operators and customers of data center facilities based on favorable costs and other conditions to construct or operate data center facilities in those markets. For example, some states have created tax incentives for developers and operators to locate data center facilities in their jurisdictions.”

Customers of QTS can rent space through a number of programs that enable customers to avoid the high costs of computing equipment by outsourcing some or all of their IT needs. Credit: qtsdatacenters.com

QTS leases its warehouse, located on Jefferson Street, from the Development Authority of Fulton County.

The mechanism is a bond-financed sale-lease-back that was created to provide QTS a property tax abatement, according to the annual report. Fulton’s development authority issued a bond with a face amount of $300 million in exchange for the deed. QTS is paying a rent equal to the debt service on the bond. The bond matures Dec. 1 2019 and QTS can purchase the facility at a cost of $10 once the bond is retired, according to the annual report.

QTS leases its Suwanee facility, according to the annual report. According to Gwinnett County tax records, the property owner is Quality Investment Properties Suwanee LLC. It’s address is the same as QTS’s headquarters, located in Overland Park, Ks. The investment company was formed in 2006, according to records kept by the Georgia Secretary of State.