Region is growing hub for cloud industry

By Colleen Wilson

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The technology known as cloud storage that digitally houses data has gone skyward in the tristate area.

As more companies come to rely on the cloud to keep their information safe in a nebulous virtual world, there is sprawling physical growth in Westchester, Rockland and Fairfield counties in the business of maintaining cloud systems.

In its 2013-18 Global Cloud Index released in November, Cisco Systems Inc. forecasted that by 2018, about 78 percent of workloads will be processed by cloud data centers, and less than 25 percent will be processed by traditional data centers.

A variety of companies that provide data storage and related services have found the region a fitting home.
A variety of companies that provide data storage and related services have found the region a fitting home.

“With the explosion of data, (companies) are not able to manage it themselves so they’re outsourcing,” said Gary Wojtaszek, president and CEO of CyrusOne Inc., a co-location provider with 31 data center facilities. “That’s something we don’t think is going to slow down at all.”

At the end of this month, CyrusOne expects to close a deal on a $400 million cash purchase of Cervalis Holdings LLC, a cloud storage company with a 168,000-square-foot headquarters in Norwalk. Part of the agreement includes the acquisition of Cervalis’ three other locations in Stamford, Wappingers Falls in New York and Totowa, N.J.

Wojtaszek, whose company is based in Texas and has data centers in seven other states, said Cervalis has capitalized on the nearby Wall Street financial market, which is part of what made it an attractive company to acquire. About 75 percent of CyrusOne’s annual revenue is from Fortune 1000 companies, many of which are in energy and oil, and the Cervalis deal would give it another 15 Fortune 1000 clients.

What Wojtaszek said he liked about Cervalis is that it has “arguably the most impressive data center platform in the New York metro area with a huge focus on financial services.”

For a company that hosts a virtual network, Cervalis has an impressive ground presence.

The $50 million Norwalk facility sits on what used to an abandoned 5-acre parking lot and is complete with fingerprint scanners in front of every door and leak detection and temperature monitoring systems, according to a report last year from the Business Journal.

About 30 miles away in Hawthorne, N.Y., is a similar facility that boasts 50,000 square feet of raised floor space and 90,000 square feet of office and dedicated disaster recovery areas.

Missouri-based TierPoint LLC acquired the company occupying the Hawthorne building, Xand Corp., in October and took on five of its other data centers in Pennsylvania, Connecticut and Massachusetts.

“Customers bring their data to us to keep it safe,” said Ralph Thomas, TierPoint’s vice president and New York manager. “It’s about security and risk mitigation.”

But it’s not just raised floor space and infrastructure security that cloud hosts take into consideration when it comes to property.

“Westchester County has lots of Level 3 connectivity,” Thomas said.

In April, TierPoint announced that Level 3 Communications, a fiber-optic network provider, will build a connection point into TierPoint’s Westchester data center to provide an additional fiber network carrier to TierPoint’s mix of carriers.

“All of our facilities have multiple fiber networks and the fiber networks that come into our facilities are diverse. They’re approaching the data center from different angles, different routes,” he said.

These measures are taken by many cloud storage companies to create a redundant and resilient system to mitigate risk if communication networks between customers and the host become compromised.

Data centers are not the only business byproduct of the increase in virtual storage space.

Fifteenfortyseven Critical Systems Realty LLC (1547) custom builds offices and retrofits existing buildings specifically for tenants looking to operate data centers.

The New Jersey-based realty firm held a ribbon-cutting ceremony last month at its Orangeburg campus in Rockland County, where it gutted a building on 1 Ramland Road that previously housed a Chrysler training center. Now the 232,000-square-foot building — which sits on 32 acres and is around the corner from Bloomberg LP’s $710 million data center — has two tenants and 140,000 square feet available for another data center occupant.

And once it fills that space, Robert DeVita, chief sales officer for 1547, said the company will begin constructing a new building. While New Jersey is known as one of the greatest data center markets in the country, DeVita said the Hudson Valley is quickly becoming a major competitor.

Because of the media attention it received, DeVita said, “what really helped the area was when Bloomberg planted their flag and built a building down the road from us” in 2013.

Ahead of the regional trend, however, is Broadview Networks Inc., which has been headquartered at 800 Westchester Ave. in Rye Brook for the last 10 years.

Since 1996, Broadview, a company that has resulted from several mergers over nearly 20 years, has worked its way from being in the regional telecommunications industry to providing national cloud services. In fact, according to its annual filing with the Securities and Exchange Commission, “cloud-based products and services comprised approximately 25% of our retail revenue and approximately 51% of new retail sales in 2014.”

This in large part has to do with a unique product the company offers called OfficeSuite, which is a cloud-based phone and portal system. OfficeSuite uses the Internet to make calls and allows users to access their office phone data from any device.

“I look at Manhattan as one of the most competitive places on the planet,” Michael K. Robinson, CEO of Broadview, said. “If you can survive in this region you can do it anywhere.”

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About the author

Colleen Wilson
Colleen is a graduate of the Philip Merrill College of Journalism at the University of Maryland. She covers energy, transportation and state government for the Westchester County Business Journal.
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