SPECIAL REPORT
DataBank’s stunning rise to prominence
w w w.constructionglobal.com
October 2017
FLYING
HIGH Oracle’s Tony Fulton on the rise and rise of aerotropolis mega-projects
TOP 10
construction contractors
TAMMER KAMEL,
CEO of Quandl, on monetising data
INFOMART COLLIERS
FOREWORD HELLO AND WELCOME to the October edition of Construction Global. Our cover feature this month looks at airport infrastructure and the rise of the ‘intelligent client’. Tony Fulton, Oracle’s Director of Industry Strategy for its Construction and Engineering Global Business Unit, explains how cloud-based solutions allow owners the ability to manage everything in the airport and infrastructure build. Continuing with the theme of technology, our second feature explores how monetising data assets can transform the bottom line within the construction industry.
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Our features also look at technology, with Colliers International discussing Montreal’s growing importance as a technology hub, an exclusive look at the Infomart Data Centers’ transformation of the former Dulles Technology Center, and an interview with Tor Björn Minde, CEO of RISE SICS North, the leading research institute for applied information and communication technology in Sweden. We have several other exclusive company insights this month spanning three continents, as well as our list of top 10 construction contractors. Enjoy the read!
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CONTENTS CONTENTS
F E AT U R E S INSIGHT
06 Tony Fulton, Oracle, discussing airport infrastructure TECHNOLOGY
32
DataBank Ltd
56 Infomart Data Centers
14 Tammer Kamel, CEO of Quandl, on monetising data TOP 10 LIST
Headline for 24 00 the article
Top 10 construction contractors
84
City of Norman Water Treatment Plant Expansion Phase II
CONTENTS
C O M PA N Y PROFILES USA 32 DataBank Ltd 56 Infomart Data Centers 70 Mainstreet Renewal 84 City of Norman Water Treatment Plant Expansion Phase II
EUROPE 96 RISE SICS
CANADA 106 Colliers International
AUSTRALIA 118 Maritime Constructions
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106
Colliers International
Mainstreet Renewal
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RISE SICS
118
Maritime Constructions
INSIGHT
AEROTROPOLIS and the rise of the
‘INTELLIGENT CLIENT’
Writ ten by: STUART HODGE
Many airport developments are more akin to a city build than traditional airport construction. These are projects are so big, they are now being classified as ‘aerotropolis’. As a result, owners are having to get more involved with every aspect of the operations. Construction Global speaks to Tony Fulton, Oracle’s Director of Industry Strategy for its Construction and Engineering Global Business Unit, who explains the importance of providing clients with complete visibility of the entire construction project… MANY BILLIONS OF dollars are spent on major transport development projects every year and it seems that more and more new airports, railway stations and subways are being built all the time. But that’s not just perception, it is, in fact, reality. Research by Oxford Economics shows that transport infrastructure investment is projected to increase at an average annual rate of about 5% worldwide over the period of 2014 to 2025. One reason for that is, of course, that modern life requires the world to be better connected than ever before and the global economy relies on people being able to circumnavigate the planet fairly easily to get from point A to point B. However, another factor in that rise, is the huge contribution that major transport hubs can directly make to local, regional and even national economies.
INSIGHT When referring to an airport and its surroundings, the term aerotropolis is being widely used. Aerotropolis refers not just to the airport itself, but also the metropolitan area surrounding it. Airports are now, collectively, becoming more and more like mini-cities in their own right. Industry expert Tony Fulton, who is software giant Oracle’s Director of Industry Strategy for its Construction and Engineering Global Business Unit, says that a key by-product of the shift towards bigger and bigger projects is that the market is now maturing. He reckons that the project owners
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October 2017
have now realised that, rather than seeking to shift responsibility for the delivery of the project elsewhere, it is now their core business to ensure everything is right and controlled in-house from planning right through to ensuring a successful life cycle for any such developments. “The US has always led the way in terms of project delivery and capability, organisations like Bechtel and CH2M,” says Fulton, who has been involved in a number of top projects in the United Kingdom including Heathrow Airport and the London Underground.
AEROTROPOLIS
“If you think of examples like the Channel Tunnel, the 2012 Olympics, High Speed Two and Crossrail – all of these are projects that have been managed from the US typically. “I would say that organisations are maturing, so that the owners – the likes of Heathrow – now see that delivering this type of project is their core business. Historically, they would’ve handed it off to somebody else to manage, but they now see that it is their core responsibility to deliver these enhancements themselves. “So that’s, for me, probably the biggest step change. In fact, the guy at
Heathrow coined a phrase; they want to be seen as the ‘intelligent client’. “That means they need to have control over the timescales, the budget and all of those things. They can’t just hand it to other people.” And that’s where Oracle comes in. Fulton says that cloud technology is helping to facilitate the management of projects of this ilk, and offers a flexibility that has not been seen before. “People want an integrated solution,” he says. “They don’t want to have to install hardware, recruit IT specialists and various different
“It’s that holistic view that nothing ever ends. We start a project, we plan a project, we deliver the project and then we look at how things can evolve” – Tony Fulton, Oracle’s Director of Industry Strategy for its Construction and Engineering Global Business Unit
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INSIGHT types of people to keep the project running. They want an IT company like Oracle to manage that on their behalf. “They also want the elasticity of cloud as well. The idea that you can vary numbers depending on how the project develops and use it when you need it, that’s the direction the industry is going. “You’ve got thousands of projects that make up a programme of work which will ultimately result in the delivery of a project like this. “It’s around lots of different areas as well: you’ve got the transportation links – some will be around the runway, some around infrastructure – but all of those separate projects require a collaboration with a lot of stakeholders.” That becomes particularly true when you consider the whole phenomenon of the aerotropolis. Oracle’s cloud-based solution now has to allow owners the ability to manage everything in the airport and infrastructure build. As a result of the all-encompassing nature of these builds, it has forced transport hub owners to look at projects now as having a seamless and continuous life 10
October 2017
cycle which takes into account all sorts of factors, such as building challenges that may present themselves, growth of passenger numbers, potential wear and tear and technology advancements. Any changes of this ilk can now be managed through the additional visibility that the software offers. That is pivotal, according to Fulton. He says: “Organisations such as airports are seeing project
AEROTROPOLIS
“…project owners have now realised that, rather than seeking to shift responsibility for the delivery of the project elsewhere, it is now their core business to ensure everything is right and controlled in-house”
– Tony Fulton, Oracle’s Director of Industry Strategy for its Construction and Engineering Global Business Unit
controls as a life-cycle requirement and it’s a continuous cycle. “If you look at Heathrow Terminal Two, no sooner was that built than the capacity had increased to fill it, so they had to look at additional means of amplifying the capacity, or maybe they could find different ways to increase the throughput without having to build new facilities. Either way they’re looking at it as a full lifecycle. “Rather than just looking at a few
need-to-do elements and getting very good at building, they’re thinking: ‘How is what we’re doing today going to impact on tomorrow? What are the things that we can retire and reduce cost on, as a result of maybe some investment?’ They’re looking at it in a much more holistic way. “Often you categorise projects against different things so: ‘Is it going to improve safety?’ ‘Is it going to improve retail opportunities?’ When 11
INSIGHT
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October 2017
AEROTROPOLIS
you actually fund that project, you have a view on the benefits you get from it and the return on investment; how much and when. And then, when you fully execute the project and deliver it, you start to see the benefits of that feeding back into your model. “It may be a case of ‘That was meant to deliver more than it did’. Or ‘What did we learn from that? And ‘What I would do differently next time?’ “So again, if, for example, you’re building a new piece of airport apron, it will have a finite lifetime. You might say it’s going to last 25 years being constructed of this material, in this way, but ultimately after 10 years, if it starts to fail, then that feeds into your model. “It’s that holistic view that nothing ever ends. We start a project, we plan a project, we deliver the project and then we look at how things can evolve. After all, the facilities you build now are not going to be the same facilities in 25 years’ time.” The complex nature of these types of projects means that nothing can ever go quite as smoothly as initially planned but, by having that holistic perspective and the
visibility to see which changes are required, you can manage each step of the project accordingly. “All of these projects come down to three things: people, process and technology,” Fulton adds. “We supply the technology, the software. The process is defined in the software and then it needs leadership from the airport. “Say, if you’re an engineer, you know you’re on site with a particular location and so when you’re about to start to work you will need to see the latest version of the design drawing. If you’re a foreman, you need to see what tasks your team need to perform today and tomorrow. “Then if you’re an executive, you need to see how this investment in the project is progressing. Essentially, what they will need to know is: are we delivering on time? Are we delivering to budget? And is the quality of the work up to spec? “It’s impossible to do your job as an executive or project manager without having visibility as it makes it impossible to chart where you are in relation to your budget. That visibility, that transparency is vital.”
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TECHNOLOGY
BUILDING
PROFIT FROM DATA
The monetisation of data assets is transforming the bottom line of many industries, but construction is only just catching on according to Tammer Kamel, CEO of Quandl Writ ten by: STUART HODGE
TECHNOLOGY
MANY BYPRODUCTS OF the technological transformation we’ve seen over the past few decades have impacted the construction industry – from 3D-mapping and building information modeling to the automation of equipment and processes. However, one area which does not seem to have been fully grasped with both hands yet is the monetisation of data assets. 16
October 2017
Recent figures supplied to Construction Global suggest that the industry for construction data, valuable to Wall Street and the markets, could grow to somewhere between $20mn and $50mn over the next five years. At least $5mn of growth is expected over the next two years alone and Tammer Kamel, CEO and founder of Quandl, a company which specialises
in the monetisation of data, is adamant that there is money to be made by construction companies, and firms in markets connected to the industry. “There’s a big opportunity here,” says Kamel. “There’s money on the table that could be taken by construction companies. “It’s relatively low-hanging fruit; the data is sitting in their
“If you can start knowing information about construction activity much closer to real-time, it empowers you to get ahead of the market” – Tammer Kamel, CEO and founder of Quandl
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TECHNOLOGY database. They just have to make the small investment involved in turning it into a product; there’s a nice healthy revenue stream to be had. “Of course, it would depend on the company and its particular line of business. If they’re a lumber company, say, then they’re going to have a very good sense of demand for lumber. They’re going to have that information implicitly because of what they do, but that could turn out to be something that a professional investor could turn into a trading strategy.
‘Tammer Kamel, CEO and founder of Quandl, a company which specialises in the monetisation of data, is adamant that there is money to be made by construction companies’ 18
October 2017
“This is a big thing – data commercialisation – and outside the construction industry, lots of companies are doing this and making lots of money. I think it’s an opportunity that construction companies should be looking at. It’s an under-tapped market.” Kamel is a former quantitative analyst who has spent his entire career in the finance industry, and he says Quandl was borne out of his own frustrations with the tools that fed data to practitioners like himself. Identifying valuable assets The computer engineering graduate has examined closely the potential for companies in and around the construction industry to make money from their data assets, and says that there are two main ways that construction insights can be interesting to Wall Street. Kamel says: “One is in a macroeconomic sense and one is in a company-specific sense. “In the macro-economic sense, construction activity is a critical part of the economy of any region, whether a specific country or globally, and it’s a substantial component of global GDP.
B U I L D I N G P R O F I T F R O M D ATA
Tammer Kamel, CEO and founder of Quandl “What’s happening day-to-day, week-to-week, month-to-month, year-to-year is extremely pertinent to any investor who uses macroeconomic information to colour their investment decisions. “In the hedge fund industry, where
we sell most of our data, there’s an entire subset of hedge funds called global macro funds which take investment decisions solely on the basis of macro-economic information. “For construction activity, they tend to use information which gets 19
TECHNOLOGY
Tesla Model S electric car at a supercharger charging station
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October 2017
B U I L D I N G P R O F I T F R O M D ATA
published, usually from governments and public bodies, but what’s interesting there is that that the data tends to be very stale, usually coming out two or three months after the fact. “So, if you can start knowing information about construction activity much closer to real-time, it empowers you to get ahead of the market. “The rest of the market will learn what happens three months from now, so if you can know what’s happening now or with a two or three-week lag, it empowers you to know things that others won’t be aware of for a month or two and take investment decisions in advance. “The other way that construction data is leveraged on Wall Street is in a company-specific way. “There are all kinds of companies whose profits and revenue are a function of construction activity – maybe it’s a lumber or an iron ore company, or a business that builds houses. All of these companies are going to be sensitive to construction activity. “You can learn all kinds of important things about any specific company if you have good insights about what’s going on in construction.
“Those are the two ways that the data gets leveraged by professional investors.” But what kind of data is it that they’re interested in? Mining data Kamel details to Construction Global how it’s very much a case of quality over quantity. In fact, some datasets literally offer just one number a day, but the number is so advantageous to certain investors that they’ll pay a lot of money for it. “We have a dataset which estimates how many cars Tesla is selling on a daily basis,” he explains. “Tesla is a hot stock and they are famously opaque in terms of information they release to the market, so all of the investors in Tesla are, to a large extent, flying blind. But with this dataset we are able to report to them: ‘Hey, Tesla sold this many cars today,’ which is gold for them because otherwise they wouldn’t know. There’s no other way of knowing. “So that’s an example of just one number and it’s worth a lot of money to these investors.” And Kamel reckons that same rule of thumb is applicable to the 21
TECHNOLOGY
“And the beauty for companies is that it’s revenue which drops right onto the bottom line. You have the data just sitting there in the database” – Tammer Kamel, CEO and founder of Quandl construction industry and the companies involved within it. “We have customers who lust for construction insights,” he continues. “They call us looking for new kinds of information about the construction industry and the state of the construction industry, because it’s so important to the economy and the health of so many companies in that sector. “If you’re talking about a lumber company, again, with access to certain data, investors might detect, for example, a sudden spike or a trend upwards in lumber orders compared to last year. Well, that’s the kind of early warning the construction industry is picking up momentum with, which would allow an investor to preposition in a certain way as they’re seeing this trend before the rest of the market. Then they can profit from it.”
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October 2017
Building profits from data A company like Quandl takes away the stress for clients who wish to monetise data, but Kamel does say that it is possible, with some investment, for a firm to put together a team which allows it do so internally. The process involves firstly identifying whether the data provides any new insight to the market, and then organising it in a way that is useful to Wall Street. After that, some technical expertise is required to put the data into a database where it can be accessed, overcoming any computer science problems. Then, a company must ensure that data is legally compliant with strict Wall Street guidelines, before some sort of sales and marketing mechanism is put in place to ensure that the data reaches the right people who are willing to pay for it. Kamel is sure, though, that it’s worth looking into for any company
B U I L D I N G P R O F I T F R O M D ATA
Quandl staff sharing ideas in a meeting in or around the construction industry, which may consider itself to have a potential data asset. He adds: “In the last 12 months it’s exploded, it’s become the hottest topic on Wall Street. It’s all about predicting the market. The only way you make money is if you can predict which stocks to buy or why commodity prices are going up and down. It’s unbelievably difficult to do so consistently. And the beauty for companies is that it’s revenue which drops right onto the bottom line.
You have the data just sitting there in the database and there is very little marginal cost to doing it. If you can take a dataset and turn it into a couple of million dollars by partnering with a firm like Quandl, then it’s great because it’s instant profit. There’s no cost, no additional infrastructure or personnel needed, so the attraction, and this goes beyond the construction industry, is because it’s an easily monetisable asset that can just be translated straight into profit.”
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BIGGEST GLOBAL CONTRACTORS Let’s take a look at the ten biggest contractors, based on total construction contracting revenue, across the world. Written by: OLIVIA MINNOCK
TOP 10
09
BOUYGUES
10
SHANGHAI CONSTRUCTION Shanghai Construction Group Corporation Ltd has a revenue of $21.26bn. It was incorporated in 1998 and currently employs 33,160 people. The main areas of business for Shanghai Construction include housing, professional construction, design, decoration, landscaping and stone mining, as well as project management, consulting and labour dispatching. The current president of the company is Hang Yingwei. As well as constructing most of the modern landmarks in Shanghai, the company has also been contracted to work on a sewage tunneling project in Edmonton, Canada, and 12,000 housing units for the Tanzanian Ministry of Defence.
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Bouygues has an annual revenue of $32.26bn. The company is based in Paris, France where it was grounded in 1952, and its current CEO is Philippe Bonnave. The firm operates in just under 90 countries and works across construction telecoms and medias. The Bouygues group employs 118,000 people and includes five subsidiaries: Bouygues Construction, Bouygues Immobiler, Colas, TF1 and Bouygues Telecom. Notable projects recently have been the Paris district court, an extension to the Port of Calais and the Hong Kong-Zhuhai-Macao Bridge.
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ACS
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CHINA METALLURGICAL The Metallurgical Corporation of China Ltd has a revenue of $34.3bn. The company is based in Beijing and employs 100,290 people. Since its incorporation in 2008, Metallurgical Corp has mainly dealt with engineering contracting, real estate, resources development and equipment manufacturing. The Chairman of the Corporation is Guo Wenqing.
‘The revenues for these companies were taken from the Financial Times on the 14th September 2017’
Spanish firm Actividades de Construccion y Servicios SA is based in Madrid and has a revenue of $39.21bn. Incorporated in 1942, the company currently employs 179,230 staff. The group is involved with mining, civil works and building works, both residential and social. Some notable projects within Spain include construction of a marina in Barcelona’s northern port and a high-speed railway line in the Basque Country. Abroad, the company constructed the M11 road in Ireland and extended the CityLink Tulla highway in Melbourne, Australia. The current CEO is Florentino Pérez Rodríguez.
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TOP 10
05
POWER CHINA
06
VINCI Vinci SA is a construction and engineering company based in France. Its current revenue stands at $47.04bn. The company was incorporated in 1955 and currently has 183,000 employees. Vinci is involved in the design, construction, financing and management of such facilities as water networks, public and private buildings, urban developments and communication systems. Current construction projects include the pediatric hospital at Warsaw University and the Atlantic Bridge in Panama. The President of Vinci Construction is JĂŠrĂ´me Stubler, who has held the position since 2015.
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The Power Construction Corporation of China Ltd has a revenue of $38.72bn. It was incorporated in 2009 and currently has 134,680 employees. It is based in Beijing where it is led by current Chairman Yan Zhiyong. The corporation is mainly involved in water conservancy and hydropower projects. It also trades materials and its subsidiaries construct highways and bridges. Power China recently competed work on the Sahiwal Coal Power Plant in cooperation with Pakistan as part of the ChinaPakistan Economic corridor.
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CHINA RAILWAY CONSTRUCTION CORP
04
CHINA COMMUNICATIONS China Communications Construction Co Ltd has a revenue of $66.88bn. The company’s headquarters is in Beijing and its current CEO is Xiang Liu. It was founded in 2006 and currently employs 118,770 people. China Communications Construction works across five areas: infrastructure construction, infrastructure design, dredging engineering, equipment manufacturing and ‘others’ which cover real estate development and fund investment businesses. A subsidiary of China Communications is currently working on Sri Lanka’s Colombo Port City.
China Railway Construction Corporation Ltd generates $99.41bn in revenue. The company’s headquarters is in Beijing and it is mainly involved in engineering, including such constructions as railways, highways, urban tracks, water conservancy, hydropower, buildings, bridges, tunnels airports and sea ports. The company became incorporated in 2007 and currently employs 258,460 people. It handles almost all domestic railway construction projects in China, but also operates overseas, having been contracted on projects like the Nigeria Railways system and the Turkey Istanbul Ankara Railway Reconstruction Project. The current Chairman of the company is Meng Fengchao.
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02 CHINA RAILWAY GROUP China Railway Group Ltd has a revenue of $102.32bn. The company mainly deals with infrastructure construction but is also engaged in survey, design, consulting, manufacturing equipment, and real estate development. China Railway Group was incorporated in 2007 and currently employs 282,090 people.
Its head office is in Beijing and the current chairman and executive director is Li Changjin. The group has many subsidiaries operating both within China and overseas, which have worked on projects from the Fez-Oujda road in Morocco to the Hangzhou Bay Bridge on China’s eastern coast.
China Railway Group Ltd has the most employees on the list at 282,090
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01
TOP 10 BIGGEST GLOBAL CONTRACTORS
CHINA STATE CONSTRUCTION ENGINEERING China State Construction Engineering Corporation Ltd has a revenue of $160bn. The company was incorporated in 2007 and currently has 255,880 employees. Its head office is in Beijing and the current Chairman is Qing Guan. The company mainly deals with construction contracts of buildings, infrastructure construction and investment, real estate development and investment, energy, survey and design and municipal utilities. It works both within China and overseas. Projects the corporation has been involved in include Shuin Hing Square in Shenzen, the construction of the Great Mosque in Algiers, and the renovation of the Alexander Hamilton Bridge, in New York.
‘The Top 250 Global Contractors list, published annually in August by ENR (Engineering News-Record), ranks the 250 largest world construction contractors, both publicly and privately held, based on total construction contracting revenue regardless of where the projects were located.’
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DATA BA N K :
Centers of excellence DataBank has enjoyed a hugely successful 18 months, characterized by acquisitions and organic development and super-charged by its takeover from Digital Bridge Written by: James Henderson Produced by: Tom Venturo
D ATA B A N K LT D
T
he last couple of years in the data center industry have been characterized by a high level of mergers and acquisition (M&A) activity, with a record 2016 set to be comfortably surpassed in 2017, with the value of deals expected to run into multi-billion-dollar territory. One of the companies that has been particularly busy is DataBank, which was itself the subject of a takeover from Digital Bridge in June 2016. Headquartered in the historic former Federal Reserve Bank Building in downtown Dallas, TX the company is a leading provider of enterprise-class data center, cloud, and interconnection services, offering customers 100% uptime availability of data, applications, and infrastructure. DataBank’s managed data center services are anchored in world-class facilities, and after a recent flurry of activity the company currently boasts 13 data centers located across Dallas, Minneapolis, Kansas City, Cleveland, Pittsburgh, Salt Lake City, Baltimore and Atlanta, operating within or managing major
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October 2017
USA
Databank data center
constructionglobal.com
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Munters a ''Cool Partner'' DataBank is a leading provider of customized colocation solutions and services that are designed to help organizations manage risk and improve business performance. With 10 data centers located in various parts of the country, the DataBanks team of experienced professionals are familiar with various challenges faced while creating energy efficient design strategies. In a due diligence process consisting of comprehensive technical analysis and discussions with existing clients, DataBank has chosen to partner with Munters and utilize the proven Oasis TM IEC data center cooling technology. Focusing on the latest DataBank location in Minneapolis, Munters Oasis TM Indirect evaporative cooling (IEC) units with the patented EPX polymer heat exchanger have been installed to effectively reject heat from the data center. The Oasis system are 100% Indirect Air Side Economizers and do not introduce outside air. With no leaks, and a re circulating system, the data center is cooled without the introduction of outdoor air pollutants that might adversely impact the servers.
In Minnesota, there is only 10% of a year when the outside temperatures are too high and moist for the evaporative cooling alone. During this time a small mechanical cooling system (trim DX) supplements the evaporative process, so that the air supplied to the data center is maintained at the right temperature. This condition where refrigeration is required to supplement the IEC only occurs during conditions with simultaneous high heat and humidity.
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Munters OasisTM IEC unit installation on the roof of Minnesota DatBank facility
The weather in Minneapolis goes into extremes regardless of the relative humidity (RH), with high RH in the summer and extremely low RH in the winter. The Munters Oasis IEC operates in one of three modes, depending on the ambient air temperature, dry, wet and wet +trimming DX. On cold and cool days, the Oasis heat exchanger operates dry and simply acts an air-to air heat exchanger. Outside air (commonly referred to as scavenger air) indirectly cools the data center air through normal heat exchange, without the use of any water. The EPX polymer tubes have been tested ยบand are proven effective despite the extreme cold in the northern climate of Minnesota where wind chill can drop to -35ยบF. Once the ambient temperature rises to a certain point, the Oasis heat exchanger will not be able to provide enough cooling while operating in dry mode. When this happens, water is pumped from internal sumps to the air handlers spray nozzles that wet the outside surface of the polymer heat exchanger tubes, cooling them with a thin layer of water. The scavenger air evaporates water on the exterior of the tubes, which causes heat to be extracted from the re circulating data center air flowing, internal to the tubes. In this evaporation mode, the Oasis heat exchanger will be able to cool the re circulated air even when outside temperatures are quite high.
Munters OasisTM IEC cooling unit installation on Minnesota DataBank facility
The highly effective Munters Oasis cooling system saves in annual operating costs resulting from lower power and water consumption compared to conventional water cooled chiller systems. The choice of DataBank to partner with Munters and integrate the Oasis IEC cooling technology has resulted in a pPue = 1.06 and a PUE = 1.12. The low PUE, proven reliability of the Munters Oasis Units has contributed to the overall capital savings experienced by DataBank, allowing them to operate with a competitive edge.
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network interconnect facilities within each of the regions. This footprint of top-tier facilities is dedicated to providing uninterrupted access to customer data, applications and IT equipment. DataBank’s services provide business solutions for corporate enterprises, including hybrid cloud services, customize IT deployments, and industry compliant regulations to meet the outsourcing needs for IT management, maintenance and operations. The company serves a wide range of customer verticals including media and content distribution, cloud infrastructure providers and telecom networks. The business has consistently made headlines in recent years – both before and since the Digital Bridge takeover – as a result of a number of eye-catching deals to buy or build facilities in some of the United States’ fastest emerging data center hotspots. In the last 12 months, DataBank has announced:
Raul Martynek, CEO
Raul Martynek joined DataBank in June of 2016 as the Chief Executive Officer. In this role, he provides overall strategic direction of the company and its operations. Raul is a 20+ year veteran in the telecom and Internet Infrastructure sector. He most recently served as a Senior Advisor for Digital Bridge Holdings LLC. Prior to Digital Bridge, he served as Chief Executive Officer for New Jersey-based data center and managed services operator Net Access, LLC. Net Access was acquired in November 2015 by Denver-based data center operator Cologix. Prior to Net Access, he was the CEO of Voxel dot Net, Inc., a global managed hosting and cloud company, which was acquired by Internap Network Services Corp. in early 2012. Mr. Martynek also served as the Chief Restructuring Officer of Smart Telecom, a Dublin, Ireland-based fibre carrier which was acquired by Digiweb in 2009. constructionglobal.com
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D ATA B A N K LT D
“With DigitalBridge we have a very active M&A program. We’re constantly looking at new opportunities.” – Raul Martynek, CEO 40
October 2017
the development of a purpose-built 94,000 sqft data in partnership with Georgia Tech; the construction of a third data center in Dallas; the acquisition of C7 Data Centers, the primary interconnection hub and largest data center service provider in Salt Lake City; the construction of a third 15,000 sqft data hall at its Minneapolis-area data center; and the acquisition of carrier-rich downtown data centers in Cleveland and Pittsburgh from 365 Data Centers. Its most recent activity, announced on September 21, saw DataBank acquire Edge Hosting. DataBank said the acquisition will provide both market expansion and additional expertise in the delivery of cloud solutions and managed services, especially for clientele requiring comprehensive operational controls for a number of commercial and government compliance standards. Raul Martynek is key to the story, having acted as a Senior Advisor to Digital Bridge before taking over as CEO at DataBank when the acquisition completed. Speaking exclusively,
USA
he reveals: “The majority of the work I did for Digital Bridge was around the DataBank acquisition, so it was obviously something that I felt very strongly about and thought would be very positive for the business. “Now that I’ve transitioned to CEO of the company, I feel the best component of the Digital Bridge relationship is that it is a group with very, very well-established access to long-term capital. To be successful in the data center space you really have to have a long-term plan and access to funds. The investments
we are making in building new data centers are not something that you get an immediate return on. “We are in the process of building two new data centers, one a 145,000 sqft with over nine-megawatts available in Dallas, which is nearing completion, and we’ve also started on a 94,000 eight-megawatt facility in Atlanta. Those types of investments would not be possible with any kind of traditional private equity type of vehicle, where people are looking to get in and out of investments in a five to 10-year period.
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“That’s really been, to me, the most exciting part. Having run private-equity backed businesses in the past, and now contrasting that with our situation here at DataBank with Digital Bridge. We can have a long-term viewpoint on the marketplace. It allows us to make different types of investments, which we believe will return very favourably to shareholders in the future.” Key to the appeal of the purchase for Digital Bridge was DataBank’s continuing ambition to grow into underserved markets, where there is huge potential for expansion, says Kevin Ooley, President and CFO of DataBank, who has been with the business since 2011. “From 2011 to 2016, the plan was to capitalize on the Dallas presence, grow into underserved markets, and then add a layer of services on top that we knew our clients wanted. And we did that. We invested in Minneapolis and in Kansas City and built a second facility in Dallas,” he comments.
Kevin Ooley, President & CFO
Kevin Ooley took on the role of President in May of 2017 and has served as the Chief Financial Officer of DataBank since 2011. He has over 20 years of extensive experience in delivering shareholder value through the creation and implementation of growth and operational strategies. Prior to joining DataBank, Ooley served as the CFO for the Thompson Media Group and as a Principal at Lovett Miller & Co., a growth capital private equity firm based in Florida. He was also a Director of Strategy for iXL Enterprises and a Manager in Accenture’s Strategic Services practice. Ooley holds a Bachelor of Industrial Engineering from the Georgia Institute of Technology and a Master of Business Administration from Duke University.
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Visit VertivCo.com/datacenter to learn more. Vertiv and Vertiv logo are trademark or registered trademarks of Vertiv Co.
DATABANK’S DATA CENTERS PITTSBURGH
DALLAS
DataBank currently operates three Dallas area data centers. It’s Legacy Park facility is underconstruction in Plano, another in the telecom-rich northern suburb of Richardson, and its downtown data center facility and headquarters is the former Federal Reserve Bank of Dallas, now a connectivity-rich carrier-hotel.
DataBank currently operates one data center facility in Downtown Pittsburgh. This site is within the telecom-rich business park, Nova Place. The site came into the DataBank portfolio through acquisition in January 2017.
KANSAS CITY
DataBank currently operates one data center facility in the heart of Downtown Cleveland. The telecom-rich location, boasting a number of toptier providers, came into the DataBank portfolio via acquisition in January 2017.
Both Kansas City data centers came into DataBank’s portfolio through the acquisition of Arsalon Technologies in April 2014. The data center sites are built out to top-tier standards and operate as the managed services hub for the company. The facilities host a number of prominent local and state-wide businesses as clients.
MINNEAPOLIS
ATLANTA
CLEVELAND
DataBank has two Minneapolis-Area data centers. Our West Twin Cities data center is located off of France Avenue in Edina, MN and its newest data center is located in Eagan, MN. The Tier-III certified purpose-built facility opened in the Spring 2015 and features unmatched power availability, connectivity and security.
SALT LAKE CITY
DataBank currently operates three data center facilities in Salt Lake City area. All three of these top-tier data center sites came into the DataBank’s portfolio via acquisition in early 2017. One is located in downtown SLC and the other two are just to the South at our campus in Bluffdale, UT.
Salt Lake City
Kansas City Dallas
DataBank currently operates one data center in the Atlanta area. DataBank’s Atlanta data center is currently under-construction in midtown Atlanta, GA, nearby anchor-tenant Georgia Tech’s campus.
BALTIMORE
DataBank currently operates one data center in the Baltimore area. DataBank’s downtown Baltimore data center came into the DataBank’s portfolio via the acquisition of the compliant-cloud and managed service specialized Edge Hosting, late in 2017.
Cleveland Minneapolis Atlanta
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“When Digital Bridge came on like Pittsburgh and Cleveland and board, they liked that strategy, Salt Lake City and Minneapolis and they agreed with it. It was a natural Kansas City. If you look at DataBank’s transition that the larger ownership evolution that’s exactly what we’ve group and dollars behind it allowed done. We started in a tier-one market, us to continue with that plan, but which is Dallas, and it’s still a very on a much-accelerated schedule, important market for us, but all our and really take it beyond the Central expansions since then have been time zone. So, we still focus into these other markets where on underserved markets we see demand evolving and, using a football as the internet of analogy, American everything becomes football, underserved more important.” NFL cities: Chicago, The recent New York, Northern announcement Virginia, Silicon that DataBank has Number of Employees Valley are very well partnered Georgia at DataBank Ltd served, with a great Tech to develop a deal of competition. So, new 94,000 sqft data we’re going after that Salt center in downtown Atlanta, Lake City, Pittsburgh, Cleveland, housing high-performance computing Atlanta, that secondary market nodes and unique datasets for that has served us very well.” university research, has certainly Martynek is on the same page: piqued the interest of the data center “What we see is that as the internet world. Located in Midtown Atlanta, continues to evolve, that there needs DataBank’s ATL1 data center will to be infrastructure in secondary serve as a HPCC (High-Performance markets; this trend that’s called the Computing Center) and will house the ‘edge’ – our view is the edge is alive Southern Crossroads providing high and well today. It exists in places speed, high bandwidth connectivity
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to research and education sites throughout the southeast and across the nation. Construction of DataBank’s ATL1 data center is scheduled for Q4 of this year, with construction slated for Q4 2018 completion. Martynek says that the opportunity to work with academia and parachute the DataBank into a new business space was too good to turn up. “This is a very high-profile project, a very major investment, and all indications are that it’s going to be very successful because it’s starting with an incredible foundation, which is Georgia Tech.” “We saw an opportunity to insert ourselves into an ecosystem that we hadn’t been in before. We’re very well established in the corporate enterprise ecosystem, we’re very well established in the carrier network ecosystem, and we’re very well established in what we call SMACC, which is social, media, analytics, content and cloud, so the internet ecosystem. “This project represents a fourth ecosystem, that we really didn’t have any exposure to. We felt that given the profile of Georgia Tech,
OVER 500,000SQ FT AND COUNTING DataBank’s recent acquisition of Stream Data Centers’ latest development in Legacy Business Park, Dallas, Texas, has expanded the company’s portfolio to more than 500,000 sqft. The data center dubbed DFW3, will be a multi-tenant, Tier-3 data center largely aimed at IT outsourcing. Located on an owned 16-acre site, the initial building will comprise 145,000 sqft with 60,000 sqft of white-space and the ability to expand to 265,000 sqft and 120,000 sqft of whitespace. “The larger footprint we have, the more we can address different customer requirements; larger customers want to deploy in multiple markets and then different types of configurations, enterprise and interconnection,” says Martynek. “That footprint facilitates our ability to be a good partner with our partners. It’s one of the benefits that we think will accrue to us as we expand.” Ooley concurs, commenting: “The larger the footprint, the more scale you have, the more attractive you are to Fortune 500 clients and large technology companies. It means that we can serve customers that need locations on the east or west coast, as well as a central location as well. “Aside from the potential for clients, the spread of locations has enabled us to attract more talent, and deepen the strength of our employees. In addition, it helps drive down our cost to capital. So just like customers find us more attractive, so do banks and equity partners.”
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D ATA B A N K LT D
“We’re reticent to go into a market without an established presence, in other words greenfield. That’s a really big difference between what’s happening now and what happened in the bubble era.” – Raul Martynek, CEO
Tubbesing Solutions is a multi-disciplined agency offering mission critical solutions, services and software for all markets requiring 100% uptime. We specialize in data centers, hospitals, government sites, factories, and anywhere a client needs reliable infrastructure to operate their business.
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it would be just a tremendous way to get into that ecosystem. We’re hugely excited about it and the conversations we’ve had with Georgia Tech have been extremely positive.” The project is also one close to Ooley’s heart, not just because of the potential it represents for DataBank, but also due to the time he spent as an undergraduate student at the University. “I’ve experienced the emphasis and resources that they put into research. It’s one of the highest rated engineering institutes in the US, and the commitment to this area and the broader Atlanta community is unparalleled. I’m really pleased to be a part of that, and we will benefit because a lot of our customers will see us providing this for them and we’ll gain credibility to be able to take this and offer it in other markets,” he comments. Away from academia, DataBank has entered Cleveland and Pittsburgh after its acquisition of network-neutral data center facilities from 365 Data Centers. “Cleveland and Pittsburgh offer very highly connected facilities, so it was a positive way for us to enter
into the marketplace,” says Ooley. “This opportunity aligned with one of our two acquisitions strategies, which is to go into a market and pick up an asset and then build our data bank design, data centers around that.” Elaborating on strategy employed by DataBank, Martynek reveals: “We look at markets analytically – not every market is going to be a good one. Cleveland, Pittsburgh and our Atlanta announcement, all three of those markets were on our radar as good markets that had good characteristics from a long-term absorption of incremental data center space. “We’re reticent to go into a market without an established presence, in other words greenfield. That’s a really big difference between what’s happening now and what happened in the bubble era. “I’ve been in the sector since 1994, so I’ve seen the evolution. In the bubble era, companies planted flags, they would set up operations in a location without a single customer. That doesn’t happen today in data center land. People realize it’s very difficult to convince users,
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sophisticated enterprise users, in a given market, to give them business just by coming up and saying ‘Hi, I’m the new guy on the block. I’m going to do a good job for you.’ “You have no track record, and this is a business of trust. The enterprise person is going to be loathed to trust you over someone who’s been in the market for three years, five years, ten years, and has that track record. That’s why we look to seek out acquisitions as our market entry method, after we’ve underwritten the viability and attractiveness
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of a given market. That’s exactly what we did with 365’s assets.” Amongst the myriad of challenges of operating a clutch of data centers across the United States is one of sustainability. Data centers are by their nature power hungry beasts that demand round-the-clock attention. To that end, DataBank measures the energy output of its centers on a PUE (percentage utilisation effectiveness) basis. “It’s a pretty simple concept, which is how much power is the entire data center using? That’s what’s on
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Legacy Park Data Center (DFW 3) - Plano, TX
the numerator. The denominator is how much power are our customers consuming?” says Martynek. “The closer you can get that number to one, the more efficient you are, because I can’t change the power usage of my customer’s equipment, that’s his decision, but I can ensure that my facility operates as efficiently as possible. We’ve been doing a lot there to ensure that we get to a very low number. Our facilities in Utah are at like 1.2, 1.3, which is very, very strong. We’re only using 200 to 300 KW per megawatt to run the entire facility.
That’s how we measure sustainability. “The market’s starting to evolve where we’re able to purchase power from more sustainable long-term renewable type of sources. I think you see, across the industry, big commitments, not only from the large customers, like the Apples and the Googles and the Amazons of the world, but even our larger data center competitors are demanding that type of option. I think those are going to trickle down to us, because we’re still a small consumer compared to them. I think we’re
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D ATA B A N K LT D
BIG IN TEXAS While DataBank has made its intentions to grow into secondary or ‘edge’ markets clear, its homes state of Texas – very much a primary market – remains hugely important to the business. It recently announced the acquisition of Stream Data Centers’ latest development in Legacy Business Park – known as DFW-3. The state-of-theart, multi-tenant, Tier-3 data center in Plano, will offer Dallas area businesses a new highquality option for outsourced data center capacity in the rapidly growing Legacy business corridor. Located on an owned 16-acre site, the initial building will comprise 145,000 sqft with 60,000 sqft of white-space and the ability to expand to 265,000 sqft and 120,000 sqft of whitespace. “The Plano submarket is one of the hottest office parks in the US
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right now. A lot of companies are moving either their headquarters or material or a substantial portion of their business to that area,” says Ooley. “And for example, Toyota, Liberty Insurance, these are companies that have moved a lot of their operations to that submarket. We wanted to be right in the heart of it. “Texas has sold itself number one as being a very businessfriendly state. Two, I think from an affordability standpoint, relative to the coast, California, New York, the cost of doing business here is still very affordable. There’s a huge talent pool here. From really, across the board. This is a big telecommunications and hightech hub, so it’s just a good labour pool from which to tap. it’s just a really good place to do business.”
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going to benefit from their activity.” It is also likely that DataBank will continue to benefit from the consolidation that is evidently taking place in the data center industry, with Martynek of the opinion that the sector is very fragmented compared to industries such as wireless, telco or cable. “When you look at this space it’s ten years behind where those other sectors are,” he says. So, plenty of potential for further acquistional activity. In addition, Marytnek believes the service offering Databank is bringing to market sets it apart from some of the competition. “We’ve adopted what is called the hybrid approach. What that means is we offer not just co-location solutions, but we offer managed service and network solutions, on a single platform in the same building. That’s not something that a lot of people do. “It’s much harder to do that,
because obviously, your expertise has to expand into a wider set of products and services. Ultimately, we see that as the winning formula in that enterprise market. We see our enterprise customers that are one megawatt and below asking us to do more for them around managed services, around network. That is a huge source of differentiation for us.” He concludes: “Our plan over the next 12 - 18 months is to continue to dig deeper in our existing marketing. That’s our function of what I described earlier in terms of bringing on new inventory, new capability. “With DigitalBridge we have a very active M&A program. We’re constantly looking at new opportunities. I do envision us continuing to expand geographically through incremental acquisitions into attractive secondary markets that fit our strategy.”
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INFOMART AND THE
15MW POWERHOUSE Written by: Stuart Hodge Produced by: Tom Venturo
Situated in Loudoun County’s famous Ashburn Corridor, the former Dulles Technology Center is being transformed into a 15MW powerhouse by Infomart Data Centers – we spoke to two of the project’s key players
I N F O M A R T D ATA C E N T E R S
I
n the growing industry of data centers, it’s all about differentiating yourself from the market, and Infomart Data Centers is a company that prides itself on flexibility of design. With its latest data center project in Ashburn, Virginia, Infomart is leveraging all of its capability when it comes to adaptive, customizable and efficient design as it looks to renovate and upgrade what was formerly AOL’s Dulles Technology Center. Infomart describes the Ashburn data center as its “most efficient, sustainable and flexible product to date,” and we spoke to some of the individuals at the forefront of the project about the electrical and mechanical transformation the building has undergone. It’s changing from a 10MW facility to a 15MW facility, but without a massive increase in size. It’s the flexibility of design which will allow Infomart to tailor its solutions to a customer’s exact requirements. Shawn Kane, Infomart’s Vice President of Engineering, was the first operations manager at the site when AOL originally opened the facility around two decades ago, and he has been part of the team which has overseen the transformation. “The kind of technology that was put in to support the infrastructure 20 years ago is dated,” says Kane. “So we’re either retrofitting or directly replacing the vast majority of all of the controls and most of the power conditioning equipment.” “It’s almost a complete strip out of the
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Shawn Kane Vice President of Engineering
Shawn Kane served as the original operations manager for the AOL Dulles Technology Center, and worked with the company from 1998 until 2015, when he joined Infomart as Vice President of Engineering. He holds a BS in Electrical Engineering from the University of Pittsburgh.
“I’ve been working in critical centers and data centers for most of my 27-year career” existing infrastructure for new, updated infrastructure.” Kane’s colleague, Doug Shotwell, Vice President of Development for Infomart, is just as excited about the refurb, saying that the building itself is “robust” and “stout.” “When AOL built the facility, they spared no expense,” he says. “We’re leveraging the quality of the building that AOL was able to construct and building upon that
with the latest power and cooling technologies available today. “It was the original AOL mega data center, one of the first large-scale data centers built in the country, and AOL spared no expense in building it, so it has great bones. “Renovating all the facility’s infrastructure from a UPS standpoint as well as renovating generators, buying new UPSs and chillers, augmenting the piping, and changing
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Doug Shotwell Vice President of Development
Doug Shotwell’s background is primarily in development and construction. He joined Infomart as a Solutions Architect in May 2012, before making the step up to Vice President of Development in December of last year.
“I work with individual customers as well as our own group to create and build data centers that meet the flexibility needs of our customers.” the design is going to give us the flexibility to deliver highly-efficient data center services backed by IT-critical power and cooling for our customers. “In the years since it was built, we can now get more capacity, more infrastructure and more efficiency in the building itself.” “While the building’s footprint will not undergo immense changes,
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other than a 20,000 sq ft addition, the size of IT critical power and storage that we’re putting inside the space will nearly double.” Months in the making The Infomart Ashburn renovation got underway several months ago, beginning with the upgrade of electrical assets such as the
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Every online transaction sets real-life wheels in motion - literally and figuratively. We’re there energizing and protecting the data centers that drive online stores. Eaton manufactures, sells and supports data center solutions from the network closet all the way to hyperscale applications with a driving focus on power distribution and backup power protection. With Eaton’s help, the journey from your computer to your front door is just a quick trip around the world. Learn more: Eaton.com/datacenters
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generators and main switchboards. “From there on out, it almost a complete renovation: new UPS systems, power distribution systems, monitoring and controls, metering, mechanical cooling, fire alarm systems, and security systems. “We’ve gutted all of the mechanical assets,” Shotwell continues. “This includes the chillers and many of the pumps; we’ve also taken apart the cooling towers and we’re putting all of those new assets in place. “The first phase of our deployment is going to be 6MW of IT critical power and cooling capacity — all brand-new infrastructure from an EPS and chilling capacity standpoint. “The second phase is where we augment about 20,000 to 40,000 sq ft of building, to build some additional infrastructure. We’re on the downslope of the first phase of implementation right now, so we’re about to commission our first 2MW of capacity.” Phase I of the project consists of 6MW of supply with 15MW of supply in the master plan for the building, with 50 new jobs expected to be created
as a result of the augmentation. These staff members will be trained in ensuring Infomart Ashburn operations meet the requirements of the Uptime Institute Management and Operation (M&O) Stamp of Approval, the highest ranking of its kind in the world. Among the most impressive aspects of this facility renovation is Infomart’s ability to substantially increase capacity without needing to increase its size. The company’s adaptability allows it to install anything from 200W to 600W per sq ft, enabling Infomart to accommodate the customized needs of its clients, rather than having them resort to a standardized design. “We’re trying to keep flexibility in our design process,” Shotwell adds. “We had some real success at our data center in Oregon with active rear-door heat exchanger technology and because of that, we’ve elected to transfer some of the same design elements to Ashburn in order to enable the same success. “We’ve also left some of the underfloor infrastructure, with the
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Go Green With Infomart
intent that if there’s a customer who has a need for high-density, we have the flexibility to easily provide that capability within the facility.” “Our existing data halls are going to be managed from a 2MW to 3MW footprint, with as much as 6MW of capacity within a 10,000 sq ft space, with no major modifications. “Our mechanical design also boasts a higher water temperature than most facilities, with chiller plants delivering chilled water supply at 65 degrees Fahrenheit. This will give us an opportunity to use more outside air as pre-cooling and to make the facility much more efficient.”
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Data stronghold Infomart Ashburn sits at the center of Loudoun County’s famous Ashburn Corridor, benefiting from the strong power grid and fiber-dense networks in the area - key features which have led to (and have been supplemented by) the vast number of data centers in the region. Kane says: “In the 20-plus years I’ve been here, I’ve witnessed a tremendous growth of data centers in the area. With new data centers come system upgrades, substation renovations, new transmission lines and new capacity to support them. “So, from a power standpoint, we’re
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well-positioned. With most of the Ashburn data centers, there’s plenty of power capacity and power capacity planning, which is crucial because many of these power transmission lines can take three to five years to install. Because of this, there was no issue in increasing the capacity of our data center - it was readily available. “Another significant feature of the Ashburn market is its network connectivity. The AOL facility was the first data center in Loudon County. The market grew from there, leaving the building in the center of it all, and therefore, very well-connected. “The connectivity in Ashburn
stems from a vast ecosystem of providers and carriers in the market, connecting all of the United States as well as Europe and the rest of the world. It’s also very easy to get from data center to data center to make that connectivity happen.” In addition to its connectivity, Loudon County boasts a number of tax benefits for data centers like Infomart, as well as their tenants and other service providers in the area. “Loudoun County and the general Northern Virginia market is very prodata centers,” Shotwell explains. “With lower property taxes as well as tax rebate programs for data center
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Colocation suites will be available in sizes ranging from 500KW to upwards of 2MW
construction and overall build, Loudon County offers a variety of incentives to attract new business to the region.” Track record The word “flexibility” is prominent throughout Shotwell and Kane’s commentary, and it really underpins everything that Infomart does. In addition to showcasing the capability throughout its Ashburn renovation, the company also
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proved its agility with client LinkedIn at its Portland facility during the aforementioned implementation of active rear-door heat exchanger technology. Although the installation of this particular technology was something Infomart hadn’t done before, the company worked in close collaboration with LinkedIn to not only install it, but also took the added step of training its staff
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on how to service and maintain it. LinkedIn’s Portland data center is now considered one of the most efficient IT operations in the world. “Our ability to drive higher-density design, as well as the innovative thinking and the creativity we employ to enable it, are what makes Infomart unique,” Shotwell adds. “We’ve built Infomart Ashburn with that same flexibility and customer customization in mind.
“Design flexibility is amongst the most common requirements from our potential customers, and what differentiates Infomart in the marketplace.”
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The Main contender Written by: Fran Roberts Produced by: Denitra Price
Main Street Renewal is a private company focused on buying, renovating, and leasing homes across the US. By taking a traditional supply chain approach to its operations, the company is building efficiencies in a highly competitive market
M A I N S T R E E T R E N E WA L
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ain Street Renewal buys and renovates homes before selling them in tranches to investors. Based in Austin, Texas, the company has branches in 19 cities, with more coming soon including Las Vegas, Phoenix, and Denver. What sets Main Street Renewal apart from its competitors is the standardised approach it takes to its properties. Of course, it wasn’t always this way. When Main Street Renewal entered the single family residence (SFR) industry in late 2012, the contractor mentality was standard across the renovate-to-rent platform. The practice consisted of obtaining multiple bids for a single project, and whoever came in the cheapest, was usually awarded the job. After the project was completed, the vendor would return to the pool for the next round of bidding with no guarantee of future work. Supply chain principles and processes remained obscure in an industry that had become comfortable with the status quo. With any successful business, sustainability lives and dies in the margins. Profit margin is the most
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discussed measure in the public space, but cost control is not the only factor that drives Main Street Renewal’s business model. Equal importance is placed on both quality of product and the ultimate margin, time. Cost, quality, and time form what Mike Cavanaugh, Senior Vice President of Supply Chain, calls the triangle of success. Each key measure occupies a single corner of the triangle and is positioned at a 45 degree angle from one another as a reminder that if one side breaks symmetry, the triangle, as well as success, becomes skewed. In the early stages, Main Street Renewal had standardised materials (granite, carpet and paint, for example) at a set price to create a uniform aesthetic within their properties. However, with multiple different vendors cycling in and out of each house every time, quality became inconsistent and repair completion timelines extended. The Main Street Renewal team identified inefficiencies within the process and decided to break rank from the industry norm and pursue a different approach. With this deviation, a dedicated
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Senior Vice President of Supply Chain
MIKECAVANAUGH After years of fun working with great companies around the world, I took a chance to apply my experience to something truly unique, to think completely outside the box. That drive is what led me to Main Street Renewal, a Real Estate Developer and Property Manager focused on the Single-Family Residence (SFR). There are very few industries left where you can take an opportunity to implement change and best practices from other industries in a unique way. This is an industry that has not fully matured to have the norms and is full of potential. I get to tap into that potential on a daily basis, take what I have learned in other industries where I have experience like high-tech or consumer and apply it to how we not only renovate a home but how we interact with our investors, vendor partners and our residents.
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- WE HAVE 405 PEOPLE AT
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supply chain team was formed. Strength in partnership The Main Street Renewal team recognised the fundamental base of each business lies within the processes by which it operates, and at the most elementary level, the principles driving those processes are synonymous across all industries. Their team saw the potential of applying traditional supply chain methodology in a non-traditional setting. “A house is unique each and every time – you don’t necessarily know what you’re going to get with any particular house,” acknowledges Cavanaugh. “We’ve tried to think about it a bit differently. We’re going to bring every home we buy to a certain standard, so we’ve taken traditional supply chain principles of sourcing, strategic partnerships and demand forecasting and applied those into that construction environment.” A typical supply chain team oversees the development, production, and maintenance of a product and is no different within
Main Street Renewal. The home and service are the end products with all contributors and resources falling under a structured network, therefore, can benefit through specific supply chain processes. The first step was directly approaching distributors and suppliers using volume and exposure to negotiate pricing on raw materials. Main Street Renewal chose a single colour and grade of each product put in their homes as a way to not only reduce cost but also create consistency and a standard of quality across all markets. This has certainly provided advantages for Main Street Renewals in terms of pricing. “If you think about a manufacturing site taking all the parts and pulling them together, we’re doing the same thing. It’s the same part we use each and every time, so that’s given us the opportunity to really go deep inside of our supply chain and work directly with our distributors and suppliers on raw material pricing,” remarks Cavanaugh. Main Street Renewal’s vendor partners can buy directly from those suppliers and distributors at
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Integrity First Maintenance & Restoration 7859 Walnut Hill Ln., Suite 310, Dallas, TX 75230
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a nationally agreed upon rate. “That mentality, Main Street Renewal allows us additional cost focus inside soon realised the benefit of forming and throughout the supply chain. We partnerships with quality vendors. can start to now optimise logistics routes and where different raw Partnering prowess materials are located, positioning, and Main Street Renewal very much where, how and what we buy,” sees its vendors as partners. Cavanaugh advises. “You won’t hear us call With control over our vendor partners the material supply, contractors Main Street although Renewal set out predominantly to streamline the industry the ‘assembly thinks about process’ our vendor for their partners as – Mike Cavanaugh products. Even contractors,” Senior Vice President after providing Cavanaugh of Supply Chain standardised comments. “The materials at a contractor mentality below market cost, in the whole building the Main Street Renewal team industry is very much ‘you are found repair timelines and quality my contractor for this job right here standards continued to fall below and when I go build that house next expectations. The deficiencies were to it, everybody’s going to have the a direct result of the vendor selection opportunity to bid for that next job’.” process which made it possible Deviating from the industry standard that a different vendor could work can be risky, but Main Street Renewal on every home within the MSR believed the best long term strategy portfolio. By eliminating the contractor was to form partnerships with quality
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vendors in each market and have both parties agree to a set labour and material pricing through one statement of work that would apply to all properties within a given market. This resulted in the dissolution of the bidding process and reduced the vendor pool by a significant volume. The contracts with suppliers and distributors for the price of materials meant Main Street Renewal can renovate homes at an all-in cost that’s below market and their competitors. Agreeing to standardise pricing didn’t guarantee work as potential vendor partners needed to meet additional standards of quality and timelines to become a primary vendor. Once on-boarded, vendor partners needed to maintain those standards to continue receiving work. Main Street Renewal would fulfil its side of the relationship by providing volume, material price, and payment timelines with a reporting cadence implemented to provide feedback to vendors on both theirs and Main Street Renewal’s performance. Vendors were initially wary of the new process but warmed up quickly when they realised
volume and material premiums could provide a steady income stream. The relationship between Main Street Renewal and its vendor partners is a two-way street, encouraging both sides to perform to a high standard. “If we have a vendor whose performance starts to slip, we prefer to spend the time and invest in that vendor – to give them the opportunity to turn around, to share with them what’s going on, to give them ideas and tools and help them potentially perform better,” Cavanaugh explains. High standards Maintaining high standards is key to the success of Main Street Renewal clients, both investors and residents want to get the best value for their money. “When we walk through a house with an investor, it’s always worth hearing the feedback from their point of view, often it is this is a higher level of standard than what they were expecting,” states Cavanaugh. “That’s really attributed to the people who develop and support the processes we have throughout our entire supply chain, everyone
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“A HOUSE IS UNIQUE EACH AND EVERY TIME – YOU DON’T NECESSARILY KNOW WHAT YOU’RE GOING TO GET WITH ANY PARTICULAR HOUSE” – Mike Cavanaugh, Senior Vice President of Supply Chain
focuses on delivering a Great House.” Quality is an important goal for the company, as Cavanaugh illustrates: “Every year we strive to hit a level of quality that exceeds the expectations from our customers. This is where our Great House mantra is derived from. We define what a Great House is with data from previous residents, input from our current residents and investors and designs from our parent company. These inputs create a standard that is higher than what you would expect allowing us
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to set the bar so unbelievably high in terms of quality. Often companies are afraid of setting a high bar but we would absolutely rather aim high and miss than aim low and achieve. We encourage people to develop, to push themselves beyond what they believe the normal barriers would be for them to achieve a higher level of success and so we spend the time to invest in people to develop.” Main Street Renewal recently attended a leadership conference to help its leaders get better. “When
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Main Street Renewal - Your Home Leasing Partner
leaders get better we all win,” Cavanaugh explains. “We have approximately 405 people at Main Street Renewal, monthly we have Lean Six Sigma lunch-andlearn session that anybody in the company can sign up for, leadership series offered by our training and learning department and an Area Manager in Training programme. These programmes are just an inkling of what we do to invest in our people.”
Process modernisation Lean Six Sigma has formed an integral part of Main Street Renewal’s drive to always be looking for ways to work smarter. “We’ve taken Lean Six Sigma principles. This isn’t the rigorous often confused approach that forces structure, but the way of thinking about processes where you look at what you do differently, through the lens of how can we better profitably service our customers,” reveals Cavanaugh. “We’re using those Lean
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Six Sigma principles to give us tools that provide us a foundational way of thinking about how we do work, how we get work done every day.” One great example of how Main Street Renewal has integrated the Lean Six Sigma way of thinking into their business is through the Hoshin Kanri. Cavanaugh explains that: “We use Hoshin as a key driver of our business goals and strategic direction setting. We ensure through the Hoshin matrix that the results expected by our investors and residents are directly tied to our one- and threeyear plans. In the typical business approach, there are always great ideas but too often those ideas outnumber resources. With the Hoshin matrix we ensure through alignment the priorities we all agreed on are the ones that are actively being worked on.” Increased competition As the US economy picks up – 209,000 jobs were added in July 2017 alone – Main Street Renewal is seeing an uptick in its business. “People are buying again and it’s a great time to invest in single-family housing. The
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LSS Certifications
trend that we’re seeing in the industry is a lot more competition in the market and we’re approaching that by trying to become more efficient in not just how we buy homes but how we rehab
homes,� Cavanaugh observes. With the support of its vendor partners, things certainly look set to continue getting better for Main Street Renewal over the coming years.
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Supplying Norman with a
safe and stable water supply Written by: John O’Hanlon Produced by: Tom Venturo
In the third week of June 2019, the new water treatment plant for the City of Norman, Oklahoma, will come online. It is breaking new ground in many ways, and will be the first in the state to use noninvasive UV as its primary means of disinfection
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eeping a large population supplied with clean, reliable drinking water is a complex business. The State of Oklahoma has a reputation for extreme and erratic weather, but the City of Norman, located around 20 miles south of Oklahoma City, averages about 38 inches of rainfall a year, so it is not exactly arid. All the same, it relies on a variety of different sources to satisfy the demands of an estimated 122,000 citizens.
In its earlier days, the city, which was first settled towards the end of the 19th century, relied on wells sunk into the Garber-Wellington aquifer, a large sandstone formation lying
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under central Oklahoma. By the 1940s, it became clear that the rapidly growing city would need to add more resources. City leaders decided to dam the Little River in 1965 and create 6,000-acre Lake Thunderbird to provide Norman and other communities with a dependable drinking water source of around 7bn gallons a year. To date, these two sources - direct supply from the lake and 31 GarberWellington wells - provide Norman with almost all of its supply. However, since 2000 the city has had an arrangement with Oklahoma City to provide emergency connection
and supply a base flow of 1mn gallons per day (mgd) when needed. Since 1988, when Norman first exceeded its allotted extraction, the water treatment plant (WTP) has exceeded its allocation 15 times. The demands on Lake Thunderbird have increased to the point that it cannot provide the City’s supply requirements on a continual basis, so the city is sinking an additional 12 wells into the aquifer to yield another two mgd. As Chris Mattingly, City of Norman Capital Projects Engineer explains: “We are out of reserves; we are treating all the lake water we are allowed to.” Currently the city
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is looking at innovative ways to re-use more of its water, including putting treated wastewater to good uses. For example, on an average summer’s day the University of Oklahoma uses 500,000 gallons of treated effluent to irrigate its golf course. The bulk of Norman’s water supply is treated at the city’s WTP, which was built in 1965. The plant was expanded in 1981, increasing its capacity from 7 to 14 mgd, and again in 2010, when the Phase I upgrade added a generator and a new clarifier, replaced the filter system, upgraded much of the electrical system and replaced lime slakers. Today it can deliver 17 mgd of treated water. However, as technology evolved and regulatory demands on water and process quality from the Department of Environmental Quality (DEQ) became more stringent, it became apparent that the City needed to look at a complete upgrade of the disinfection processes at the WTP. The City embarked on Phase II, a project that will see the introduction of ultraviolet light (UV) as the primary disinfection process, new ozone and chemical processes, a new pumping
“All of the citizens of Norman have to vote to approve any rate increase – not just the water users” – Chris Mattingly, City of Norman Capital Projects Engineer
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station and new administration and maintenance buildings. The City has an interesting way of raising money for infrastructure, explains Chris Mattingly. “All of the citizens of Norman have to vote to approve any rate increase – not just the water users. We have to be very transparent, educate our public to make sure they are aware of all the issues and why we need the funds, and then we put it to a vote.” The case was set out in detail, based on a pilot study carried out
by Carollo Engineers, a hugely experienced and highly respected consulting firm, and the $35mn project was given the go-ahead by the voters. Norman is borrowing $31mn at a low rate of interest that will save Norman ratepayers about $7mn for the construction phase of the project through a state fund administered by the Oklahoma Water Resources Board (OWRB). Driving the design was the request of the DEQ to move to a more substantial disinfection process
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“All of the processes work together to deliver the improved water quality that water users in Norman will see” – Amber Wooten, Project Engineer Carollo Engineers, Inc.
than the chloramine they were using as a primary disinfectant, says Mattingly. “We tried chlorine but that generates trihalomethanes (THMs), which are regulated and we were not sure we could meet those standards - so we ended up thinking about ozone. Then Carollo came up with the recommendation that UV would be the most effective as our primary disinfectant, with an ozone cycle to improve the taste and quality further.” This will be the first use of UV in Oklahoma to disinfect a large WTP, though the technology has been
used elsewhere, notably at New York City, which has the largest potable water UV treatment plant in the world. As Amber Wooten, Project Engineer at Carollo explains: “As part of the pilot study, we evaluated placing ozone at different points along the water treatment process. We found that ozone was not the best solution for disinfection, but that it offers some other benefits, such as taste and odor reduction. The combination of ozone and UV allowed the City to make the most efficient use of the treatment as well as the most cost-effective way to attain the levels they wanted.” The design is sophisticated. For example, the City had concerns that the introduction of ozone could interact with bromine in the water to form bromates. “We found that adding a little chloramine upstream of ozone reduces bromate formation.” says Amber. “The other interesting thing is that we converted the WTP’s existing filters to biofilters to further enhance treatment with minimal capital cost. All of these processes work together to deliver the improved water quality
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that water users in Norman will see.” The other key partner in the Phase II upgrade is the Foley Company, which has performed many water treatment projects and is constructing the new facilities. Foley’s project manager, Dave Hoover, admits that although his firm has completed many downstream wastewater UV installations, this is its first on the water supply side. “In most wastewater installations the UV lights hang down in an open channel, and because the water is soiled you need a lot of them. What I like about this is that it is in an enclosed pipe,
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the water is clearer; so you can do it more efficiently and use less energy.” The preliminary building excavation and piping rerouting has been completed and now the critical path for the project is through the Chemical/Ozone Building. “We are scheduled to install the piers soon,” Hoover says. “The soil condition is quite unstable, and Carollo has designed the facility with 104 deep piers drilled 11ft into the shale.” Teamwork between the partners is key. During construction, the plant has to run continuously. The longest period it can be shut down
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is at the time of lowest demand in the winter, when the city can be supplied for a maximum of three days using water stored in the city’s storage towers and emergency supplies from Oklahoma City. Geri Wellborn has been manager of the plant for the last year and is the first woman in Norman’s history to manage a utility. She’s looking forward to the challenges of running the new advanced facility. “I think it will change the way we operate. We are still waiting to hear exactly what the DEQ will require of us in the way of recording and reporting. UV hasn’t
“Foley has been great at communication with us. We see their guys on the ground every day and talk with them regularly. This has been a really positive collaboration” – Geri Wellborn, Water Treatment Plant Manager for City of Norman
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been used for disinfection in this state. But we have been busy making sure our operators understand that they are going to have a lot more options as to where they dose chemicals, how they monitor chlorine residuals, for example and not just making sure that the levels at the back and the front of the plant are correct but at points in between.” All of that data has to be collected,
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and it will involve a lot more quality and control testing for her team. Much of this can be automated, but that too will involve staff training. New systems being put in place include an upgrade to the existing SCADA system, software for the filters and monitoring software for the UV and ozone circuits. Chemical feed systems dating back to the 1960s will be largely automated too, which will make life much easier for the operators once they get used to it, says Wellborn. All of this has been foreseen by Carollo. “As part of the construction process, the manufacturers are required to provide training on all of the new equipment, both operations and maintenance,” explains Amber Wooten. “Some of them are asked to provide longer term maintenance, giving staff the opportunity to continue learning. From the engineering perspective, we also talk to them about holistic operation and including control testing we discussed.” As Chris Mattingly insists, the
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fixed goal that keeps the teams from Foley, Carollo, the WTP itself and the City working so well together is to see that the citizens of Norman get a reliable supply of high-quality water. “We have monthly planning and coordination meetings, and meet on site every two weeks. Foley will give us warning of any shutdowns,” says Geri Wellborn. “Foley has been great at communication with us. We see their guys on the ground every day and talk with them regularly. This has been a really positive collaboration.”
At the peak of construction Foley will have up to 150 people on site, most of them hired locally. It is a safe bet that the people of Norman will find their money well spent and enjoy unrivaled water quality over the coming decade.
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PHOTO CREDIT: PÄR BÄCKSTRÖM
ON THE RISE WRITTEN BY: FRAN ROBERTS PRODUCED BY: LEWIS VAUGHAN 97
RISE SICS AB is the leading research institute for applied information and communication technology in Sweden. Tor Björn Minde, CEO of RISE SICS North, describes the Institute’s new research data centre, located in Luleå
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ISE SICS North is a new subsidiary of RISE SICS, established in Luleå. “It’s like the Swedish Fraunhofer. There are other countries that also have their own research institute organisations,” notes Tor Björn Minde, CEO of RISE SICS North. “Here it’s called RISE – Research Institutes of Sweden.” The SICS part of the Institute’s name stands for Swedish Institute of Computer Science, whilst the north references its location in Luleå, around an hour drive from the Arctic Circle. Minde’s work at RISE SICS North is only part of what he does. “I work at Ericsson, the telecom company where I had my 30th anniversary last year. My current position is Head of Research Strategies. Part-time I’m loaned out to this organisation, which I’m running as a CEO,” he observes. Originally focused on mobile audio, Minde transitioned into computing
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activities, which later facilitated his heading up of RISE SICS North. “The nascent activity in Ericsson is called Ericsson Labs and that took me over to more computer platforms and now data centres,” Minde comments. “So, that’s the background of why I’m CEO of this research institute.”
Continuous expansion RISE SICS North was formed around the creation of a new research data centre in Luleå. “We have projects on cloud platforms, hardware and software for big data analytics. All of that we run in our two-modules-large data centre,” advises Minde. “We have 200KW installed right now and we are continuously expanding, so we will add another 150KW during this autumn. “We call it ICE and ICE stands for infrastructure and cloud research environment. So, we cover both infrastructure and the software
Module 1
enclosure
PHOTO CREDIT: PÄR BÄCKSTRÖM
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RISE SICS Module 2 Inauguration party in the
PHOTO CREDIT: PÄR BÄCKSTRÖM
ICE facility
Tor Bjorn Minde CEO
Tor Björn Minde is currently head of research strategy at Ericsson Research with 30 years’ experience in ICT research. He has research management experience leading industry research teams, sections and sector research areas. He holds an adjunct professorship at Lulea University of Technology in systems technology and has been involved in many academic research projects. He is part of LTU technology faculty board and also a board member of Norrbotten research council. His main research interests are audio, geo, sensor, context aware, machine learning and data center technologies. He led the team behind Ericsson Labs with the objective to improve Ericsson ability in open innovation and network exposure. Ericsson Labs operated a server infrastructure with network functionality offering on-line experimental API's, Application Programming Interfaces. Lately his main focus has been on cloud infrastructures for energy efficient operation. He has around 20 publications in various conferences and workshops and more than 40 filed patents in the field of signal processing and applications since 1989. Tor Björn is currently CEO of RISE SICS North AB and working as the manager for the large-scale research infrastructure facility build-up project. He will lead the initiative and implement the vision of a large-scale data center facility to support Swedish industry and academia.
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“If you can have a selfdriving car, why can’t you have a selfdriving data centre?” – Tor Bjorn Minde, CEO, RISE SICS North
application platforms.” At ICE, clients can test their innovations in a riskfree environment with the added service of being able to measure hundreds of environmental factors.
Pioneering projects Despite being established just 18 months ago, much progress has already been made by RISE SICS North. “We are now at €1.8mn a year in turnover and we have 11 persons right now that work here,” notes Minde. “Our scientific leader is Jon
Summers. He is from the University of Leeds – he started up Data Centre Alliance and is behind the Data Centre Transformation Conferences.” At present the facility is working on four major projects. “There is one project on data centre automation. If you can have a self-driving car, why can’t you have a self-driving data centre?” Minde comments. “The machine learning algorithm already can perform lots of activities, complex identification problems much better than humans. “The long-term mission is to come
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to autonomous data centres, but to using analytics in new applications, so get there you need to really measure that it’s beyond big data at an analytics and model data centres correctly. level,” Minde explains. “We have some You need to have a data collection pre-studies on heat reuse and liquid software tool chain and database and cooling and we hope to expand them. you need to have all the tools in place We’re looking into drying wood and for the sensors. The project is about also liquid cooling. So that is what trying to understand how to make the the data centre is used for – different data centre autonomous and how types of projects to understand to optimise the holistic view on how you can create better data automation – it’s centres in the future.” a very big project with Ericsson and Head in the cloud ABB involved. The first module of the “We have one project data centre, a roomabout how to use in-room module, has natural convection been running since Number of and draught in data February 2016. “This Employees at RISE SICS North centres so you can first module is used reduce the fan use. for big data analytics, It’s a real thermodynamic it’s used for some cloud project,” continues Minde. “The third applications and that is running in the project is to look into how a data servers. We have 200 servers there, centre can be a part of the smart some GPU [graphics processing unit] grid in the future. A data centre has accelerated,” Minde advises. “Then we lots of battery, it has a water tank use the data centre to do modelling.” for cooling and it has an intrinsic “The second module is more a possibility to be a big battery. It can lab and we have built it so we can then be a load balancer in the grid. do a slab floor or a raised floor. We “The fourth project is really about can change equipment easily with
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RISE SICS
much bigger doors and we can move equipment in and out. We can exchange coolers and racks, we can exchange lots of different equipment there. Module three, that we’re going to install this autumn, will be an open computer lab,” Minde explains. Outside the modules the space will be used for smaller experiments in a wind tunnel, a cube for thermodynamics, a water tank, solar panels on the roof and renewable energy storage. All to be built during the autumn. On the roof there is also a cooling tower that will be used.
Facebook, it’s first European data centre is being located just next door. Facebook has donated equipment to the research data centre, and plans are in the making for setting up projects together,” explains Minde. “Another important partner is the Luleå University of Technology. We have only been around for one and a half years, so we will expand the number of companies involved, but we have counted the companies we count as being part of our network, and it’s nearly 60-plus.”
Increased integration A collaborative network In order to work on such a number of projects, RISE SICS North is collaborating with several partners. “The companies are Ericsson, of course, and ABB are involved. Additionally, there is Vattenfall, the power company, and Swegon, the ventilation company,” advises Minde. “EON is another power company involved, alongside a number of smaller companies like Acon, Metria, Eitech, BnearIT, ArctosLabs, Netrounds. “We also collaborate with 104
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Looking ahead, the holistic view of the data centre will become increasingly important for RISE SICS North. “The whole system needs to be much more integrated to make it optimised. It seems to me that some parts of the data centre industry are very conservative – they do what they always have done. If you need redundancy, you hit the solution with a diesel engine and that is not the future – we need to find other ways to do redundancy. That’s why we’re around, to challenge the way data centres are built,” acknowledges Minde.
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Control/ management works space in the data center constructionglobal.com PHOTO CREDIT: PÄR BÄCKSTRÖM
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Making space for
CANADA’S
enterprise
Colliers International is the biggest player in the Canadian commercial real estate space. Its success depends on an active market, something that all parts of the country, including Quebec, are enjoying
Written by: John O’Hanlon
C O L L I E R S I N T E R N AT I O N A L
C
anada’s commercial real estate sector looks to be performing strongly. Indeed, according to Colliers Internationals’ Canadian Office and Industrial Markets Q1 2017 report, Vancouver in particular appears to be a commercial hub gathering momentum. The British Columbia heartland has the most office construction underway out of any Canadian city.
The report also points towards solid demand for industrial space, with 1.2mn square feet (sq ft) of space absorption in the first quarter of this year. The signs are positive, and points towards Canada as a stable place to do business. According to Jean-Marc Dubé, SIOR Senior Vice-President at Colliers International, based in Montreal, one should look back at the way Canada weathered the global financial crisis. “Canada came through better than most partly because we are systemically conservative! Our banking system is set up in such a way that is harder for individuals and businesses to over-leverage and our regulatory
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framework did not allow a subprime bubble to develop.” It is hardly surprising that the Bank of England looked to a Canadian banker when looking for a governor to steer it though troubled times. Economic ups and downs
Perhaps the biggest challenge for the economy in general has been the drop in oil prices and the manufacturing downturn, Dubé suggests. “That impacted our business significantly in the west of the country. At $120 a barrel, all of our offices were strong, especially in Alberta. We were seeing unprecedented office deals done in Calgary and Edmonton. Then when the oil price crashed and interest rates fell back, these were the areas where business slowed the most.” That is all in the past, and Alberta is now doing well. The major office markets in Canada, Vancouver, Calgary, Edmonton, Toronto, Ottawa, and Montreal, equate to 476mn sq ft of inventory – 89% of the entire country. In the past, Montreal, just 500 km from Toronto,
CANADA
tended to be less attractive to investors, something Dubé admits has something to do with its different market and business culture. “We have not in the past had the same level of Chinese investment, so to date Montreal has not exploded quite like the other cities.” Ironically, it’s this very fact that is giving Montreal a huge impetus right now. Frankly, the business hegira to Toronto, which has become one of the world’s ‘alpha’ cities on a par with the likes of London, San Francisco,
“Historically known as being the manufacturing centre for Canada, Montreal is moving towards being the hightech centre. Many larger companies don’t want long-term leases and have a corporate strategy of not signing them.” – Jean-Marc Dubé, SIOR Senior VicePresident at Colliers International
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Singapore or Dubai, has made it almost unaffordable. Montreal is seen as a place business can still locate with all the advantages but at a more affordable price, and activity is ramping up rapidly, including foreign investment. Colliers’ business model depends on the volume of transactions it is involved in, whether over property acquisition, brokerage, tenancy and leasehold agreements or consultancy. The company is an essential partner
for real estate investment trusts (REITs), major corporations, government departments, local authorities and investment agencies – anyone, in fact, with an interest in developing land. This is why Montreal is such an exciting place to be in today. What attracts an investor is the capitalization rate, the ratio of net operating income (NOI) to property asset value. “The higher the cap rate, the more attractive it is to the investor. We have been seeing 6.5%
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to 7% in Montreal but a lot less in Toronto, where an 800,000-squarefoot building just sold for less than a 4% cap rate. An investor can secure excellent premises in Montreal and still make a much bigger return,” Dubé explains. Speculative buildings and repurposing
One of the things that has been hurting Montreal is a shortage of inventory. There are very few buildings for sale, Dubé comments.
There has been very little speculative building there as opposed to the greater Toronto area (GTA), where recently some 9mn sq ft of space was under construction without pre-agreed tenancy. “Spec building is riskier,” he explains. “If you don’t get a tenant you are going to be on the hook for all the expenses as well as the financing costs of the property. The fear in Montreal was that the big corporations looking at taking up to a million square feet were all focused on the GTA.”
Jean-Marc Dubé SIOR- Senior Vice-President Jean-Marc Dubé is a senior member of the industrial division of the Montreal Colliers International team and an accomplished executive with a proven ability to develop and implement strategies that support his customers’ business and financial objectives. His expertise includes tenant/purchaser representation, property listings (sale and lease), sale-leasebacks, built-to-suits and land development.
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INSPIRED BY PEOPLE INSPIRING THE INDUSTRY AGILITY . CREATIVITY . ENGAGEMENT
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CANADA
“Our banking system is set up in such a way that is harder for individuals and businesses to over-leverage.” – Jean-Marc Dubé, SIOR Senior Vice-President at Colliers International
Now Montreal is beginning to see developers breaking ground on speculative projects. The city is also growing in importance as a technology hub, and this is driving an exciting new development involving the repurposing of former industrial buildings. A good example is the former Johnson Wireworks building now called Lofts Wireworks located at St-Henri in the Sud-Ouest of Montreal. This old factory is in an area that is being redeveloped with multiple cafés, bars and restaurants only minutes from the new Montreal Super Hospital and Place St-Henri Metro. Yet, it offers offices between 1,680 and 29,845 sq ft for a lot less than what you would pay in Toronto. Dubé has seen the project through from the early stages of negotiation with the developer: “I helped the client
acquire the building, go through the process of repurposing the building and brought it back to the market as flex loft office space. Now I am working on locating the tenants and negotiating the transaction.” Now this single tenant building will lease approximately 25 businesses. Some will be high technology businesses, some startups - there will be co-working space, as well as Montreal’s first makers’ space called Espace Fabrique, where earlystage companies can take their first steps from concept to prototype. “Historically known as being the manufacturing centre for Canada, Montreal is moving towards being
9Triple8 Jasper reactivates Downtown Edmonton with market-defying sale
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Colliers participating kids Montreal fundraiser
the high-tech centre of the country,” Dubé says. Montreal, Dubé adds, is becoming one of the top cities in the world for the gaming industry. Many of the city’s old textile factories are being completely restructured to meet this new type of demand. New trends
On the industrial side, large spaces are still needed and given the lack of inventory of buildings 300,000 sq ft and over, it’s better to build new. Newer constructions might go up
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to 32 ft of clear height, but a new distribution centre being put up by Broccolini Construction on the outskirts of Montreal is 120 ft from floor to deck. Clearly, robots will have to do all the picking, as the building will be completely automated. This represents a transformation of the real estate market, specifically concerning employment. In addition to brokerage, the firm has large property management teams as well as one of the largest project management groups in
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Colliers participating in the pedal for kids Montreal fundraiser
Canada – a team that can oversee the construction of any large asset like a hospital, for example. Colliers also has a robust IT department that has developed a proprietary countrywide platform, as Dubé explains: “CRM+ allows us to communicate and understand what our colleagues are doing – for example, I can see if a colleague in Mississauga is working with a certain company. It helps our clients too by ensuring a truly joined-up interaction with them.”
Seamless communication across vast distances serves the Canadian real estate industry’s new realities. In the past, 10-year leases were common but in the fast-moving tech environment mentioned above, that is too long. Clients are looking for flexibility, short-term leases of five or even three years suit fast growing companies better. Larger companies are also reviewing longterm leases, which, under new accounting rules, are treated as capital assets affecting the balance
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Andrew Maravita Managing Director, Quebec With over 20 years of experience in the real estate industry, Andrew Maravita has become a wellknown expert among his colleagues and peers. Prior to joining Colliers, he held various executive leadership positions with large publicly traded companies and managed national real estate finance and equity platforms in Canada. He spent nine years at GE Capital as Vice President and Managing Director of Business Property Canada.
John Arnoldi Executive Managing Director, Eastern Canada John Arnoldi began his career in commercial real estate in 1986 as a commercial officeleasing agent when he joined The Arnoldi Group. He continually produced results for his team and began leading the department early on. He joined Colliers in 1992 as a downtown office leasing sales representative and was a consistent top producer for the firm.
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sheet. “Many larger companies don’t want long-term leases and will have a corporate strategy of signing shorter terms,” Dubé adds. Quicker turnover properties mean a greater volume of transactions and Dubé and his team are confident that growth in the Canadian commercial and industrial property markets will continue for some years, and that Montreal will take up much of the slack. His early career was in teaching so it’s no surprise he has a passion for training the new
generation of young advisers and brokers. “I believe no time is wasted when you are learning something new. This is a people business: I sell knowledge and relationships!”
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RIDING OUT the
storm
Maritime Constructions emerges stronger from period of recession Written by: Niki Waldegrave Produced by: Jeff Debicki
Refurbishment of a timber jetty at Port Victoria, South Australia for the Yorke Peninsula Council in June 2017
MARITIME CONSTRUCTIONS
I
t’s been a rough couple of years for Australian construction contractors, but a market leader in marine infrastructure services, Maritime Constructions, has ridden the storm.
Thanks to a few tweaks such as branching out overseas, cutting costs and becoming a major EPC (engineering, procurement and construction) contractor, the award-winning Port Adelaidebased business is booming. Its main divisions are Maritime Constructions, which does major projects, Dredging and Port Development, and Harbours and Marine making up the Maritime group. Major projects in the pipeline include building the Onslow Marine Support Base (OMSB) at Beadon Creek in Western Australia, a long-term EPC contract with Kangaroo Island Plantation Timbers (KIPT) to develop a bulk load-out facility, and dredging the mouth of the Murray River. “We’re coming out of a big recession as far as South and
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Western Australia are concerned,” says GM – Western Region, Imran Lambay. “The last 24 months have been pretty bad for contractors and the fact we’re still here is testimony to us reacting to the market conditions. We adjusted across the business to and ride out the storm.” As part of the consolidation initiatives, the fabrication workshop was closed and the business – which operates in South Australia, Western Australia, and Northern Territory – also began to look overseas. The company recently installed three new sewerage ocean outfalls as part of an on-going water treatment project in the Pacific Ocean island of Kiribati for its government’s Public Works and Utilities Department. “Given what’s happened in the last 18 months in Australia, we decided to expand out of the country,” Lambay adds. “And we certainly see the Pacific region as a new emerging market.” The business is particularly targeting jobs that are funded by the Asian Development
AUSTRALIA
Reconstruction of bulk loading facility at Klein Point, South Australia for Adelaide Brighton Cement in October 2009
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Bank (ADB) that’s spending a lot of money in the area. “There’s dredging to be done, sea walls to be built, sewage treatment plants to be done for world health reasons, and we’re tendering for everything we can there,” he adds, explaining that 99% of jobs come by open tender. “We have to be pre-qualified and meet certain qualifications in terms of turnover, in terms of experience and our ability to actually do the job. ADB is very strict about this. “If we win the tender, we’re then handed over to the local government to execute the jobs.” Thanks to the Kiribati project and an onslaught of new long and shortterm projects, the last year has been much more fruitful that previous 12 months, netting an annual turnover has increased considerably.
“We’ve had a lot of tenders coming up from government,” adds Lambay, “and fairly major projects, like KIPT and OMSB, but at the same time our bread and butter contracts, like with the Department of Transport in South Australia, have kicked off. “We have long-term dredging contracts, and long-term construction contracts with the SA State Government maintaining jetties and harbours. Thankfully the last 12 months – the last six months especially – have been fantastic. “We’re looking positive in terms of Australia.” Lambay says that in his nine years with Maritime Constructions, which currently has about 105 staff, he’s proud of being a part of taking the company to the next level – of being an engineering contractor. “What we’ve now achieved
“Thankfully the last 12 months – the last six months especially – have been fantastic. We’re looking positive in terms of Australia” – Imran Lambay, GM – Western Region
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is selling ourselves as an EPC contractor,” he smiles. “We bring smarts to the job – we’re not just there to pour concrete or tighten a bolt. “, do the drawings, and provide the client with a turnkey solution and tell them what the design needs to be to last its lifetime, or to cope with the weather patterns and condition of a particular site.” Maritime Constructions is one of the few companies to attain a Class 1 Demolition Licence from SafeWork WA (Department of Mines, Industry Regulation and Safety) to undertake demolition activities in Western Australia. This allows it to deconstruct, refurbish and demolish any marine infrastructure, including jetties and wharves. It’s also one of the only contractors to do both dredging and construction, like at the marine support base at Onslow. The project consists of a 200m wharf, a 36m wide landing craft ramp and a 700ton heavy lift crane pad for servicing the offshore oil and gas industry. “That job required a lot of
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“We want to design the job, do the drawings, and provide the client with a turnkey solution and tell them what the design needs to be to last its lifetime, or to cope with the weather patterns and condition of a particular site” – Imran Lambay, GM – Western Region
dredging and construction,” explains Lambay. “That’s what sets us apart, along with the fact we self-perform most of our work. The Kangaroo Island Plantation Timbers (KIPT) project at Smith Bay is also a key long-term EPC project for the company – and the island, as its multimillion dollar wharf will be used to export logs to the world market. Now that the business has
AUSTRALIA
Design and construction of a new jetty for tourist vessels at Monkey Mia, Western Australia for the Shire of Shark Bay in December 2014
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Design and Construction of marine support base for servicing the oil and gas industry at Onslow, Western Australia for Onslow Marine Support Base Pty Ltd in September 2017
“Everybody within the company is accessible, and everybody has a say” – Imran Lambay, GM – Western Region
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weathered the storm, Imran says the biggest challenge is keeping skilled staff in the marine world, claiming: “If there aren’t any interesting projects, workers gravitate away to find something more interesting.” Workers battle their fair share of challenging environmental conditions, like the tropical monsoon conditions experienced at Wyndham when the company was building the Anthon Landing Jetty and Berthing Pontoon. The same project had workers
AUSTRALIA
constantly battling significant 9m tides and strong currents and. in spite of these challenges, the professionalism of the workers meant that this jetty project won the 2012 WA Engineering Excellence Award for Engineering in a Regional Community. “One of the exciting things that attracts labourers and skilled people to Maritime Constructions,” Lambay confides, “is that all our jobs are so different, in so many different areas. “And we remain a very family-
oriented company, with a management style that’s very inclusive, so when we’re bidding for a project, it’s not uncommon for everyone to be involved with helping us bid or plan it. “Everybody within the company is accessible, and everybody has a say.”
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