The Future of Mission Critical: A Q&A with our Director of Development

Requiring the utmost reliability and minimal downtime, mission critical facilities are the backbone of our daily lives—operating rooms, data centers, labs—anything that simply cannot afford to fail. 

Our team has been building data centers since 1992, helping to play a role in the data center evolution. What began with basic raised-floor rooms has now transformed into developing state-of-the-art data center facilities. 

With the surge of AI in 2023, our team has adapted to the evolving mission critical real estate sector, leading the construction of hyperscale data center campuses nationwide. We are managing $2.5 billion in ongoing third-party general contracting projects, including multiple one-million-SF campuses across the U.S. 

As mission critical facility development continues to grow and shift with the world’s needs and technological advancement, our team continues to further our presence within the industry.  

But how do we navigate such an important and ever-changing landscape? Todd Johnson, Director of Real Estate Development for our Mission Critical sector, provides his perspective and insight into why our team is diving deep into the data center world.

Why is our team uniquely positioned to be successful in the mission critical space?  

Todd Johnson: We have been building mission critical data centers since 1992. What Ryan is focused on is data centers, but overall, there are three we want to narrow down and focus on:   

• Original cloud data centers close to the metro areas. They are called Core and traditionally host websites and provide cloud services. 
• AI data centers. They are geographically unconstrained and do not necessarily have latency concerns. They can operate anywhere that is served by the appropriate power and other related infrastructure.  
• Edge data centers, which are smaller 10,000 to 50,000 SF data centers intended for the Big 5— AWS, Microsoft, Google, Oracle and Meta— to extend their reach without building full regions. An Edge building can be a physical presence in a small market, which brings a more complete product offering closer to the users.    

What sets our team apart when it comes to building mission critical facilities? 

TJ: We are not just building the shell; we are building the project starting at the electrical feeders that come from the substation, the site work, the medium voltage switch yard, the MEP serving the data halls, the racking for the data halls, right down to the whips (the power source for the servers). 

This is a new and unique position to be in. Most third-party developers are only building shells. So that gives us credibility, relationships, advanced knowledge, and how to position ourselves. We currently have 27 projects in our portfolio.   

What makes the development process unique or especially challenging for our Mission Critical work versus other types of projects?  

TJ: The bigger challenge with getting developments built and rent flowing (lease) is the lack of some of the most critical equipment needed: electrical gear.  For most buyers, there is a minimum of 3-year delay of necessary components, and as much as 5 years.   

So how do we work around that? My favorite saying is, sure, there is a 4-year wait time, but somebody is taking delivery this week. There’s often an opportunity to prioritize your project to find new suppliers, to work things in a way that accelerates your time frames. We are in the right place with the right team to help resolve the Long Lead Equipment (LLE) issue and take advantage of the huge opportunities.   

Why is there such a wait time for electrical gear and things needed for mission critical projects?  

TJ: The AI fire, which started only two years ago, is 100% to blame. Late 2022 was when I started hearing, “We need big campuses and a bunch of them…go!” I believe it was triggered by ChatGPT and the realization that Wall Street cared about AI.  

The opportunity for AI came when ChatGPT kicked out examples of wide-ranging functional AI programs that made people say, ‘Wait a minute…this is real; this is doing something relevant” and Wall Street turning around and asking, ‘What are you doing with this opportunity?” So, a fire was lit that day and off we went for the scramble. We all thought the existing data center boom was crazy to keep up with…but AI increased demand at least five-fold. 

The reason there is an equipment issue: we weren’t ready for a 5x increase in demand. I watched the LLE equipment issue evolve from, ‘Hey, we are having long lead time for generators,’ to the Big 5 fully taking over supplier production lines, then contracting full production lines, and now we are seeing the Big 5 “help” these companies to build production lines to meet the demand. However, LLE timelines continue to get longer. I am confident that the marketplace will get it solved.  

When we factor in AI, why is now the time for us to pursue Mission Critical, then? 

TJ: We need to build data centers to allow the AI opportunity to play out. Certainly, the money is being invested already. Will there be an oversupply later? Possibly. But we aren’t seeing it anytime soon.

I think the challenging aspects of getting data centers built are helping Ryan to succeed and separate the wheat from the chaff. Building data centers is not easy, and we have a team that can tackle those issues better than others. At the end of the day, clients will build data centers.  Ryan is ready now, proactively offering solutions, ready to go.  

What types of mission critical project trends do you currently see or predict? 

TJ: There is going to be some fallout of companies who are trying to chase this product. There’s a lot of money being thrown at the segment right now to buy land, leading to overpaying for land and chasing things that are in the wrong direction.

For our team, understanding the current and potential future issues facing hyperscale development is fundamental. For example, amongst all the optimism of the different sites, I had to throw in some doses of reality on the LLE issue, or we would see delayed rent starts.  We must deal with it head-on in advance. 

I think there will be fallout, so there will be great opportunities for the ones who are doing the right things from the beginning. 

How are we overcoming the sustainability challenges and requirements of these projects?  

TJ: Well, the Big 5 users each have their own sustainable goals and contribute to the resolution. All the Big 5 are great renewable energy partners, including development through third parties.  They all have goals of being net zero on the power side as well as net positive on the water side.   

Water has become the new sustainable issue that has a higher hurdle to resolve, but the good news is they all have teams to address sustainability on all the natural resource fronts. The result is that we have great partners in achieving sustainability. Our job as a developer is to explore the opportunities early, choose places where the impact is the least, understand the impact going in and understand alternatives.  

At our largest development project, as an example, we did a water study right away. We were looking at where we would get more water, and how much water is realistic without negatively impacting the aquifers. The study assesses all the aspects of water impact. The water is still highly usable; all you’re doing is cycling through the system so you can recharge or use recycled water in irrigation or industrial processes for the next industrial user down the line. Our team proactively conducted the study of what our boundaries and opportunities are in advance of any user being close to the project. We have used the study to inform potential users of what is possible for water resources in the project.