A Utah company that specializes in operating data centers has acquired a Colorado Springs center from insurance giant Progressive, with plans to more than double the facility's size over the next few years.
Novva Data Centers paid $38.5 million in August for the 190,000-square-foot complex in the Northgate development in northern Colorado Springs; it will lease half of the center back to Progressive and seek tenants for the rest of the facility, said Wes Swenson, Novva's CEO. The Salt Lake City area company specializes in developing and acquiring data centers it leases to companies that don't want to operate their own facilities.
Jeff Sibel, a Progressive spokesman in Ohio, where the company is based, said Progressive hired JLL Capital Markets to sell the center after an internal review determined Progressive no longer needed the entire center. Technology changes such as virtualization — which allows more efficient use of servers — and cloud storage reduced the space Progressive needed in its data center, which opened in 2005 to house servers and other computer equipment that operate the company's websites, store customer and corporate information and process transactions.
Progressive still operates a call center and information technology operation on an adjacent campus at 12710 Voyager Parkway that employed about 2,000 people in early 2020, most of which are still working remotely since the company has not recalled employees to its offices. Nearly all of the data center's employees were retained after the sale either by Progressive or Novva, Sibel said. The number of employees in the data center was not disclosed by either company.
"Outsourcing of data centers to companies like ours is increasing," Swenson said "It takes three to four years to build a data center and with the (COVID-19) pandemic and people working from home, more capacity was needed, so companies turned to us because we had available speculative inventory (of data center capacity). It is easier and less expensive for clients to come to us to build and operate a center."
Data centers can cost $200 million to $300 million to build since they require an extensive network of power generators to keep the center operating during power failures, must be cooled to about 70 degrees so servers don't overheat, and use high-speed telecommunications equipment to transmit huge volumes of data quickly, Swenson said. The centers have huge power requirements — the former Progressive center uses about 6 megawatts a year, or enough to serve up to 5,400 homes for a year, but will need 30 megawatts of power after an expansion.
Novva is converting about 15,000 square feet of office space to become part of the data center and plans to spend up to $300 million on a 250,000-square-foot expansion it looks to complete in late 2023 on vacant land it acquired in the data center purchase. Swenson said several of its clients are looking to expand, some from Denver that are following employees who have moved to Colorado Springs, as well as other local data centers that may need more capacity.
"We love the Colorado Springs area and the state. This center was built as a campus and has been well cared for, has renewable power available, and the employees and available talent there are as good as anywhere," Swenson said. "We like high-altitude locations because we practice waterless cooling, using outside air to cool the inside of the facility and refrigerants to cool the building on warmer days during the summer."
Novva is building a 330,000-square-foot data center for multiple clients near Salt Lake City that will open Tuesday and can be expanded to 1.5 million square feet. The facility, estimated to cost $1 billion when all expansions are complete, will feature walls that are 18 inches thick and will include another 14 inches of insulation to keep temperatures inside the facility constantly cool.
The company also is planning two more data center developments in the Western U.S. during the next nine to 12 monthswhere it plans to build large data centers for multiple users, Swenson said. He started Novva in 2018 with backing from Los Angeles real estate investment trust CIM Group after selling Provo, Utah, area data center operator C7 Data Centers in 2017 to DataBank, which operates 65 data centers in Denver and 28 other U.S. and European cities.
FedEx, Hewlett-Packard, SAP America, Walmart and several other companies operate large data centers in the Colorado Springs area.