Can you provide an overview of QTS and your leadership roles within the company?
Tag: Thank you for the opportunity. QTS has a 20-year track record of designing, building and operating world-class data centers, delivering the critical infrastructure for the world’s largest and fastest-growing companies. David and I have both been with QTS for about 15 years... Over the years, we've developed a close relationship both personally and professionally. We have been a unified entity for years in serving QTS and will continue to reflect that in our leadership of this company as we leverage complementary skills and expertise while balancing decision-making.
David: We have a very strong partnership, and our teamwork has been a key factor in the company’s success over the years. We share the same vision for QTS – provide the digital infrastructure critical to the future of our country and economy and serve our communities - and are deeply committed to driving the business forward. It’s been an incredible journey, and we’re proud of what we’ve built so far.
How is digital transformation impacting the demand for advanced data centers, and what role does QTS play in this shift?
David: The digital transformation, particularly fueled by AI, is a significant driver in the increasing demand for data centers. Historically, the cloud service providers, or hyperscalers, have been growing their businesses at 25-30% per year, primarily focused on consumer-based products. AI has only added to that growth, becoming an additional layer on top of the already dynamic industry. AI has expanded the need for data center resources not only for hyperscalers but also for other industries, like insurance, medical operations, and manufacturing companies, who are increasingly leveraging AI for their operations. The demand for data center space is growing at a much faster rate, and we refer to this as the “unit of growth.” For instance, what was once considered a large deal, like a 10-megawatt deal, is now considered a relatively small deal.
Tag: As this demand grows, it is vital to lead with power. It’s no longer enough to simply acquire land and build a facility; the process must start with securing power. The utility company needs to be involved early on, followed by land acquisition, partnering with the local community, and then building for the customer. At QTS, we’ve been at the forefront of these changes, and we’ve adapted to meet the evolving needs of the market by providing innovative solutions and strategic partnerships.
What challenges does energy pose to scaling up data center operations, particularly in light of AI’s demands?
David: The complexity of energy planning is a major part of our work. AI has created fluctuations in demand, making it difficult for customers to predict exactly how much power they’ll need at any given time. For example, a customer may ask if we have 250 megawatts of power available in the next six months, and using the scale of our platform, we’re able to quickly figure out how to meet that demand and provide large-scale, power-ready campuses for long-range capacity planning. But energy isn’t the only factor; land acquisition, supply chain management, and labor are also critical to success. The ability to secure land, obtain permits, and manage labor relationships all play a role in ensuring we can deliver projects on time and within scope.
David: One of the ways we address the energy challenge is by actively engaging with power companies to be part of the solution. Instead of simply submitting requests for power, we work closely with power companies to help with transmission needs, substation construction, and other infrastructure updates that facilitate improved reliability and modernization of the power grid, ultimately benefitting residents. This proactive approach has allowed us to secure the power we need to meet our customers' demands. Ultimately, the key to scaling up successfully is early engagement and collaboration with energy providers and other stakeholders to ensure that power is available when and where it’s needed. We implement long-term power provider partnerships and secure electrical service agreements for large-scale campuses years before commissioning.
How do you foresee the gap between demand and available capacity evolving over the next few years?
Tag: The biggest shift we’ve seen in recent years is the concept of availability zones created by hyperscalers. These zones, like those in London, Frankfurt, and Santa Clara, were designed to provide redundancy, low latency, and high uptime for customers. However, with the rise of AI, workloads have become less dependent on these traditional availability zones.
As a result, we now have the opportunity to expand into non-traditional data center locations like Cedar Rapids, Iowa, and Madison, Wisconsin, areas that wouldn’t have been considered for data centers in the past. We thoughtfully select locations and often partner with communities – and the officials who know the communities best – that express a strong desire for our presence, recognizing the positive impact we bring. Our developments generate millions of dollars in tax revenue to support local priorities related to schools, roads, housing and other critical needs, while also reducing the tax burden on residents, in addition to the thousands of construction and permanent jobs per data center campus.
David: The increasing demand for AI-driven workloads has enabled us to look beyond the data center hubs and diversify geographically to accommodate this growth. This geographic diversification is essential as we face land and power shortages in traditional data center locations. To meet growing demand, we’ve started developing data centers in new areas, like in Cambois at the former British Vault site in the UK. By diversifying our operations, we can continue to grow and serve our customers without being constrained by the limitations of traditional locations.
What role does cybersecurity play in ensuring the safety of data, and how do you manage these threats?
David: Since data centers are critical infrastructure, they are among the most secure and resilient facilities in technology. Robust cybersecurity and physical security are critical aspects of data center operations.
Our role is to provide a secure environment for our customers’ data. While customers are responsible for the security of their own networks and data, we focus on providing a safe and compliant environment for them to operate within. We ensure that our facilities are secure and offer the infrastructure and services necessary to protect their data. As technology advances, we’re committed to continually improving our security measures to stay ahead of evolving risks.
What steps is QTS taking to reduce the environmental impact of its data centers, particularly regarding energy consumption and sustainability?
Tag: Sustainability is a key focus for QTS. One of the most important steps we’ve taken is in the area of water usage. Eight years ago, we made a conscious decision to design our data centers to consume no water for cooling. Traditional data centers can consume up to 1.5 million gallons of water per day for cooling, but our closed-loop system, once operational, does not withdraw, consume or discharge water while cooling the data center, saving billions of gallons annually across our portfolio. For example, our Cedar Rapids project, which is a 1-gigawatt facility, will save four billion gallons of water each year. This is a major environmental benefit and demonstrates our commitment to responsible resource management.
David: In addition to water conservation, we’re also focusing on procuring carbon-free energy. In 2024, QTS achieved 100% utilization of carbon-free operational electricity by our data centers. We actively invest in renewable energy projects and are exploring options like geothermal energy and nuclear power to ensure a steady and sustainable energy supply for our data centers. Sustainability is a core component of our long-term strategy, and we’re committed to reducing the environmental impact of our operations while continuing to grow.
Is the US ready for the growing demand for data center infrastructure, and what challenges remain?
David: The US is on track to meet the growing demand for data center infrastructure, but there are challenges ahead. The industry must accelerate development to keep pace, especially in the critical years of 2026 through 2028. While the data center industry is growing rapidly, there is still work to be done to ensure we have the necessary capacity to meet future needs. That said, we’re optimistic about the future. The collaboration between the private sector, public sector, and government is stronger than ever, and there’s a concerted effort to ensure that the U.S. will be ready for the demands of AI and other emerging technologies.
Tag: Despite the challenges in the short term, we believe the trajectory for the data center industry in the U.S. is extremely positive. As the demand for AI and data processing grows, we expect to see more alignment across all sectors to ensure that the necessary infrastructure is in place. The work we’re doing today, and the partnerships we’re building, will play a crucial role in preparing for the future.
