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Looking Ahead: Growth, Sustainability and 5G in 2023

Welcome to 2023! It’s only natural that, as the year begins, we look back at what we learned in 2022 and consider what’s ahead for our customers, the data center industry and CoreSite.

First, I wish to thank all our customers for trusting CoreSite to be your data center partner. It inspires us to deliver the highest level of service and operational excellence. And I want to personally thank my colleagues at CoreSite. I have the privilege of leading a staff that exemplifies professionalism, is constantly innovating and deeply committed to our customers.

Familiar Themes: New Normal and Sustainability 

The “new normal,” characterized on the one hand by unpredictability and by resilient business models on the other hand, is here. Digital transformation initiatives enable the flexibility to adapt to the new normal, and a growing number of companies are moving from on-premises data centers into colocation and clouds as part of that process. The 2022 State of the Data Center report found that 94% of IT leaders surveyed by CIO research group are either currently using a hybrid IT model or plan to adopt a hybrid IT model within the next year, relying on a combination of public cloud and colocation resources.1

Sustainability continues to be an industry priority. Last year, our blog post around this time focused a great deal on the topic. I’ll not go into it as deeply now but I’m confident that as the industry continues to focus on sustainability, data center providers will move closer to emissions reduction goals. 

Our approach to sustainability is centered around being more energy efficient, reducing our carbon footprint and helping customers reach their sustainability requirements. We committed to “open standards and governance on carbon impact in materials, products, and power across digital infrastructure” by joining the Infrastructure Masons Climate Accord (ICA), a historic cooperative of more than 150 companies established in 2022 that is dedicated to reducing carbon in digital infrastructure materials, products and power. 

New Opportunities: Investments in Growth

Obviously, one of the most important events for CoreSite in 2022 was the integration of the company with American Tower, after the acquisition closed in December 2021. This combination provides CoreSite with the financial wherewithal needed to sustain elevated levels of capital investment as we grow our data center campuses while providing American Tower with a highly distributed direct cloud onramp portfolio, setting the stage for cloud services to be accessible at the mobile edge.

Another vote of confidence in CoreSite was cast when Stonepeak invested $2.5 billion in July and an additional $570 million in October of 2022. As a leading investment firm specializing in infrastructure and real assets, Stonepeak’s experience in the digital infrastructure sector makes it an ideal equity partner, one that understands data center industry challenges and opportunities.

All of this points to growth, the key message of this post. In terms of the data center industry, one recent report projects 14.4% data center colocation growth in the U.S. from now to 2030.2 The global colocation growth outlook is similar, estimating a CAGR of 10.85% from 2022 to 2028.3 

That leaves us with a good problem: developing assets in response to increasing demand. It’s why we launched new construction projects at our data center campuses in Silicon Valley (SV9), Los Angeles (LA3), Northern Virginia (VA3) and New York (NY2). 

We also expanded our Southeastern regional footprint by acquiring a data center in Miami, as well as adding two data centers in Atlanta and one in Orlando as part of the post-acquisition integration with American Tower. If you are familiar with Atlanta, you know that it is one of the fastest-growing data center markets, with the third-largest concentration of Fortune 500 companies in the U.S. 

Our Orlando data center delivers a large-scale, highly interconnected fabric including our Open Cloud Exchange® (OCX) and inter-site connectivity. The interconnection fabric is unique in the region, supports one of the fastest growing metros and is a key hub for enterprises, networks and clouds in Southeastern U.S. and Latin America. You can learn more about the 28 data centers we own and operate (in 10 markets) by accessing this interactive map.

Ongoing Transformation: 5G, Wireless-Wireline Convergence and The Edge

2022 will go into the books as the year when more than 50% of U.S. consumers accessed 5G networks.4 Another milestone is that rural 5G coverage rose from 29% in 2020 to 65% in 2022. Major carriers have invested heavily in 5G for good reason.  This is an auspicious start, but it’s just the very beginning of the 5G revolution. As 5G and subsequent low-latency, high-capacity data communications technologies are rolled out, enterprises, digital platforms and carriers will be able to take advantage of wireless-wireline convergence (WWC), which will open a wealth of opportunities for the entire ecosystem. 

5G WWC changes the economics that have been holding back rural broadband deployment. These markets now include IoT devices, which increases demand, opens new revenue opportunities and, because 5G networks reduce dependence on physical infrastructure, lowers costs. 

Just as important is the impact wireless-wireline network convergence should have on quality of life. Healthcare, education and on-the-job safety will be enhanced. Smart cities will have the infrastructure needed to operate much more efficiently and provide services in response to citizens’ needs. Research a bit and you’ll find a near limitless number of use cases.

American Tower and CoreSite are endeavoring to help shape the future of the edge by leveraging a combination of towers at the point of network convergence, CoreSite’s native cloud onramps and the OCX, our software-defined platform for automating network services management. 

You might have seen an article in Data Center Frontier featuring Tom Bartlett, the President and CEO of American Tower. He said that American Tower is in the process of designing “a blueprint that can be rolled out at scale as the edge ecosystem develops and demonstrate the differentiated value proposition at American Tower and CoreSite can offer potential customers. To date, our team has identified over 1,000 sites within our existing U.S. tower portfolio that we see as shovel-ready candidates for mobile edge deployment.”5

What We Can Be Sure Of: Change and Choice

Being ready for both anticipated and unexpected change is perhaps the biggest lesson of 2022 for our customers and us as we go into 2023. One thing is clear, digital transformation initiatives are gathering momentum and the continuum between private and public workloads continues to shift as the digital supply change grows in applications and capabilities.

For digitally mature organizations, our data centers enable advanced, cloud-native technologies (artificial intelligence, advanced analytics, zero trust security, etc.). For those in earlier stages, we are a vehicle for “getting out of the on-premises data center business.” For all our customers, we enable smart cloud initiatives that create ever-better experiences for their customers, staff and partners. 

Choosing to be a future-ready enterprise is the first step to achieving business objectives on the horizon and setting aspirational goals that inspire technology innovations and process efficiencies.

Finally, I most look forward to more in-person meetings, events and conferences – connecting with our customers and our communities – and working with my colleagues as we return to the office on a hybrid schedule. 

It’s an exciting time in our industry. Let’s move it forward, together, in the coming year. Welcome to 2023!

Get to know CoreSite better! Start by reading the Why CoreSite overview brochure and call, write or email us today.

Juan Font | President and CEO of CoreSite and SVP of American Tower
Juan is responsible for leading CoreSite’s strategy, innovation and growth while delivering value to customers, partners, shareholders and communities where CoreSite and American Tower operate.