David Cervantes, senior vice-president, advisory and transaction at CBRE in Montreal and a member of CBRE’s Data Centre Solutions Group. (Courtesy CBRE)

The Montreal area has the ingredients to outpace other cities in Canada and the Northeastern U.S. in data centre growth, says David Cervantes of CBRE.

“We have low power costs, generally low real estate costs, and access to a good tech workforce,” says Cervantes, CBRE’s senior vice-president, advisory and transaction in Montreal and a member of the firm’s data centre solutions group.

Montreal gained increased validation as a data centre hot spot recently when the city was named by the Datacloud world congress as the best location in the world to set up a data centre, Cervantes says.

The Montreal region won the Excellence in Data Centres Award in June, in a presentation spearheaded by Hydro Quebec, topping locations in Finland, Norway and Scotland.

A report by Montreal International, Greater Montreal’s economic promotion agency, notes the region benefits from electricity rates as low as 3.98 cents/kWh, government incentives and footholds from global players including Amazon Web Services and Google Cloud.

Hydro Quebec program to attract data centres

In 2016, Hydro Quebec announced a move to attract data centres in a bid to sell surplus energy. It’s offered investors highly competitive rates, a portfolio of appropriate sites, representing over 25 million square feet and located in strategic areas, support to get projects up and running quickly and energy-efficiency expertise to help reduce energy consumption.

Quebec now has more than 40 data centres.

Cervantes notes data centres “use a heck of a lot of energy” which Quebec sells as being clean and green, notwithstanding the fact much of it may have been derived by flooding natural ecosystems.

“Outside of that, it’s an impressively renewable resource,” providing much more consistent supply than wind or solar energy, he says.

“In a lot of other parts of the world, power comes from coal or something dirty. You’re just doubling down on a dirty enterprise.”

Cervantes says issues like corporate social responsibility are secondary when data centres choose Montreal as a destination.

The international market hasn’t necessarily bought in to green power, he says, noting major data centres are all in Northern Virginia despite its “very dirty power.” To compensate for using dirty power, they buy environmental credits, he says.

Digital Infra Montreal

On Nov. 12, Cervantes will speak at Digital Infra Montreal, an event that will promote the area as a smart choice in North America for data centres.

Citing JLL’s Data Center Outlook, conference organizers say data centre capacity could grow by 350 megawatts by next year in the Montreal area, far ahead of areas like New York/New Jersey (160 megawatts) and Toronto (63 megawatts) and second only in growth to North Virginia (394 megawatts).

Montreal’s growth is being driven by low power rates and renewable energy source and high-profile investments over the past few years that includes Amazon, Google and Vantage, organizers say.

The ROOT data centre at Baie D’Urfe in Montreal. ROOT was recently acquired by Texas-based Compass Datacenters. (Image courtesy ROOT)

Cervantes says Amazon’s decision to build a data centre in Varennes, southeast of Montreal, has created a pipeline of high bandwidth connectivity in several municipalities on the South Shore of Montreal.

South Shore municipalities like Saint-Bruno “wanted to develop high-tech industrial parks and, are taking advantage of being on the fibre path.”

Last winter, Vantage Data Centers bought one million square feet of land in Saint-Bruno at more than $12 per square foot. COLO-D is developing a similar-sized footprint with a 150 MW data centre in the South Shore municipality.

However, not much additional land is available in St. Bruno for data centre development, Cervantes says.

Data centres “are not job creators”

Municipalities like Beauharnois, southwest of the city, are “tickled pink” to receive data centres, he says. “Some mayors have it in their mandate to abolish dirty industrial, so data centres fit.”

Still, while data centres represent a “wonderful” tax base, there is pushback from some municipalities as to whether or not they want data centres. “Data centres are not job creators and yet they do fall into the category of high-tech industrial,” he says.

For example, some municipalities are saying no to data centres near stations for the new REM light-rail train, Cervantes says, favouring more job-intense industries.

He notes that in mid-July, Amsterdam, which had lured tech companies with attractive taxes and relatively cheap electricity, outlawed data centres until the end of the year. The Dutch metropolis said the speed with which data centres have opened is putting a strain on its real estate market and power network.

New players entering Montreal market

Meanwhile, other major players are entering the Montreal market. Last month, Texas-based Compass Datacenters acquired Montreal-based ROOT Data Center, which operates two data centres in the city.

It was the first expansion outside of the U.S. for Compass which operates data centres in Dallas, Fort Worth, Phoenix, Columbus, Ohio and Northern Virginia.

ROOT’s installations in the Montreal suburbs of LaSalle and Baie-d’Urfé total 221,000 square feet and have a capacity of 35 megawatts.

“The big boys want to be here and the little guys are happy to oblige. It’s a great exit outcome for the little guys,” Cervantes says.