CRG-West rides IP content boom

The transition to an all-Internet protocol network and subsequent boom in content is fueling more than one type of network business model. Among those cashing in is CRG-West, a wholly owned subsidiary of global private equity firm The Carlyle Group that is rapidly expanding its independent carrier hotel and data center business.

We are in a high creative cycle right now--for everybody it is an exciting time,” said John Savageau, managing director of CRG-West.

Since the first of the year, CRG-West has expanded and upgraded its One Wilshire facility in Los Angeles, added new buildings in Chicago and Boston, and entered the Miami market as well. The company now manages more than 2 million square feet of data center, collocation and office space in Los Angeles, San Jose, Chicago, Boston, Miami, and Washington, D.C.

And, Savageau admits, the firm would be operating in New York City, if it could find the right facility. “That’s the sore spot right now,” he said. “New York is our highest priority.”

Driving all this growth is the onslaught of networked applications and services and the resulting need for data centers and for network interconnectivity.

“Telecom evolves in a cycle,” Savageau said. “We are in a very creative cycle where telecom is looking not just at circuits in TDM and IRU [indefeasible right of use] capacity, and PTTs running the show, now communications is becoming packetized and IP has changed a lot. It’s changed how we look at entertainment and how we communicate as a society. All the services that converge on packets, all of that is opening up a lot of opportunities for young creative companies to further think up ways to exploit packet communications. We provide the locations for companies to develop and place their applications--whether it is content, whether it is gaming--we can give them high-density interconnection points.”

CRG-West’s genesis was in its parent company’s real estate investments, he said. “When the Carlyle Group finds a candidate property and that property is attractive for use as a data center or carrier hotel, or is a mixed-use building in a location that is attractive, they will turn that property over to CRG-West,” he said.

Its current growth efforts are more aggressive, however, and CRG-West is actively seeking new buildings in major markets such as Atlanta and Dallas.

“We want our buildings to be in a location that has a lot of cable interconnections--submarine or terrestrial fiber optic terminals--which is why we are in cities such as Los Angeles, San Jose, Washington, D.C. and Chicago, because they are smack in the middle of those major interconnections,” Savageau said. “We also have to look at the availability of electricity, permitting--how hard is it to do business in those cities--and the local economic climate. We would not go into depressed areas as quickly as in areas where there is good opportunity.”