Data Takes Center Stage

Thriving technologies such as virtual reality, artificial intelligence, and cloud computing are leading to rapidly increasing global demand for faster connectivity and data storage.

Though still considered a relatively young asset class, investor appetite for data centers—the gigantic warehouses that hold vast numbers of computer servers that store, process, and distribute data—continues to grow in line with technology, which has impacted upon many areas of modern life and business. 

North American data center investment volume totaled more than $12 billion in 2018 (inclusive of single-asset, portfolio and entity-level transactions), according to CBRE research. Capital availability remained abundant throughout the year, with 33 percent of total investment volume focused on single-asset and portfolio transactions. This year’s volume is anticipated to total more than 2018 levels with several large M&A transactions closing.

Kristina Metzger, who oversees the Data Centers specialty practice for Capital Markets at CBRE, focuses her time advising domestic and offshore investors in the disposition and acquisition of these properties across North America.

Metzger has extensive knowledge and experience in data center real estate, having represented clients in transactions totaling more than $3 billion. Capital Watch caught up with Metzger to discuss this growing sector of commercial real estate that is rapidly moving into the mainstream, her career to date with CBRE, and how she balances work and family. 

What Does Your Role at CBRE Involve?

I collaborate with our investment sales, Debt and Structured Finance, and colleagues in the data center leasing space on the acquisition, disposition and recapitalization of data centers and telecom facilities across North America. I also work with our Global Workplace Services account relationships to execute monetization strategies for enterprise-owned facilities.

What is CBRE’s approach to Data Centers Capital Markets?

We engage the best team of diverse subject matter experts on each and every project. This often times means collaborating with our local office or industrial professionals, market leasing specialists, as well as data center facilities management and construction management. I am continuously impressed and motivated by the industry-leading talent at CBRE and so grateful to be able to work with these leaders.

What’s Been Your Biggest Success This year?

Growing CBRE’s market share and presence. In our first 12 months, we will achieve a 400% increase in transaction volume in data center asset sales. Our high percentage of the overall market share gives us a distinct advantage in driving value for our clients and achieving the best outcomes.

What’s Been Your Biggest Challenge?

Getting the word out about CBRE’s capabilities in the data center capital markets space. It is widely understood within the data center community that CBRE is the world’s largest data center facilities manager and we have a great team of real estate leasing specialists. Our access to global capital and investment banking capabilities are less known. We are working tirelessly to grow our brand recognition in these areas. 

Are There Any Industry Misconceptions About the Sector That Need to Change?

I am frequently asked if cloud computing will eliminate the need for data center facilities moving forward. It is quite the opposite. Cloud computing is driving the need for more data centers. As we all increasingly access information remotely all of that data needs to be stored. Around 90% of the world’s data was created in the last three years – the data center market continues to see exponential growth as a result.

How Do You Achieve a Successful Work/Life Balance?

I am fortunate to have a great support network of friends and family both inside and outside of the office. Our household is very dynamic as my husband and I both work full-time and equally parent our two sons, Gavin (3) and Conor (1). We would not be able to do it without the great support of close friends, family and incredible colleagues. Our boys do a great job of keeping me balanced and reminding me what is most important, to stop and smell the roses, or in our case, to run around and play in the dirt.

Bringing Life to Work

I’ve looked at clouds from both sides now,
From up and down and still somehow;
It’s cloud’s illusions I recall,
I really don’t know clouds at all.

 Joni Mitchell, Both Sides Now

Problem-solving is a little like cloud watching: You can study a problem from several points of view and still not solve it completely. A case in point came at a recent client presentation that involved a review of a new book by Alec Ross entitled The Industries of the Future. While I agreed with many of his conclusions regarding the types of industries that would lead us through the 21st century and how we would get there through the “internet of things”, the book alarmed me for what it didn’t say.

Specifically, the book didn’t adequately address the enormous human cost of these new technologies and gave very few reasonable solutions on how to deal with the folks who are left behind. Ross posits that even if many workers’ wages have stagnated and job security has evaporated as a result of technological advancement, they are still better off from an economic perspective because the price of goods (especially electronics and fresh food) is so much cheaper now. But I question the meaning of “better off”. Is it more economic in nature, or is it more human or utility-based where people find meaning in their lives?

As I told my clients, if I ever met Alec Ross in person I’d give him a piece of my mind! Ross’ book also prompted me to reflect on how I might empathize with those who could be affected by my own business ideas.

What is the characteristic of a good and unique business idea and how is one generated? How do you come up with a new way of looking at problems in the $29 trillion global commercial real estate industry when people are betting billions of dollars daily to come up with just such an insight? Here are two suggestions:

Idea Generation Technique #1: Brute Force. This is the fallback approach I see most often. When in doubt, churn it out (reams of analysis). The upside of this approach is that you will be prepared. The downside is that if you present your clients with too much information, their eyes are likely to glaze over.

Idea Generation Technique #2: Think Differently. I look back on my own career as a lawyer, an investment banker, a capital markets leader and now a research leader. Sooner or later I will figure out what I want to do with my professional life. Jack of all trades, master of none? Or is it that this diversity of experience helps me see patterns and gather certain insights?

We all have unique backgrounds and shouldn’t be afraid to bring those insights to the office. Don’t leave your career and life experiences at the door when you walk into the office; use them to think differently about the problems in front of you and to persuade others.

Which brings me back to Alec Ross. Life has a funny way of calling your bluff. I recently spoke at a Greater Washington Board of Trade meeting and who was the keynote speaker? Alec Ross. So here was my opportunity.

I found Mr. Ross backstage and told him that I disagreed with the short shrift he had given to the fate of workers who are displaced by new technology. I disagreed with his take on workers being “better off” simply because they can buy more stuff. And I pointed out to him that there was an alternative view that this tech revolution is overblown in its positive life-changing consequences. So there!

Mr. Ross took each piece of my argument and rationally explained why he agreed or disagreed. He showed empathy for workers, noting his background as a Teach for America teacher and as a janitor. He used his life experiences to persuade me that his core philosophy wasn’t ideologically hell-bent on technology at the expense of those less fortunate. Moreover, he stressed that the people who will be best positioned in the future will be those who are inter-disciplinary in their thinking and have both technical skills and the cognitive reasoning and communication skills to bring it all together. I wanted to disagree with him, but couldn’t. He was preaching to the choir. He had used his life experiences both to develop his argument and to persuade me that, even if I didn’t agree that all of his arguments were right, they were all reasonable.

Use your own life experiences to identify and communicate problems and solutions through your unique lens. In doing so, you will have the same impact on your colleagues and clients as Alec Ross had on me.

By Spencer Levy, Americas Head of Research, CBRE.