Hartford Business Journal

HARTFORDBUSINESS.COM | JANUARY 13, 2025 11 A data center in Aurora, Colorado owned by 365 Data Centers, a Norwalk-based business that operates 20 data centers across the country. CONTRIBUTED PHOTO Data-Driven Norwalk data center operator grows into $100M business; CT's high electricity prices prevent in-state growth Norwalk headquarters, mainly handling back-office functions. About 160 employees work at the data centers. Others are based at customer service centers in Florida and New Jersey. DeSantis said establishing a data center in Connecticut is not a priority, but he hasn't discounted it as a possibility. Connecticut's high costs of elec- tricity, real estate and wages make the cost of running a data center higher than in other states, such as Pennsylvania, New Hampshire and even Massachusetts, DeSantis said. His company's largest data center uses 20 megawatts of electricity annually. Because data centers consume so much power, energy costs are especially important deter- minants of their location. DeSantis noted that in New York, the state has created an entity that subsidizes power for businesses, called ReCharge NY. ReCharge NY provides discounted hydropower to busi- nesses for up to seven years in exchange for job creation and investment commitments. DeSantis said his data center in Long Island takes advantage of the program and pays a little more than 16 cents per kilowatt-hour. In Connecticut, commercial customers pay about 20 cents per kilowatt-hour. Tax incentives have limited impact Connecticut has tried to attract more data centers by creating tax incentives through the state Depart- ment of Economic and Community Development (DECD). In 2021, the legislature enacted the Connecticut Data Center Tax Incentive Program, which can waive sales and use, and property taxes for 20 years for data centers that invest at least $200 million ($50 million if located within a state-designated enterprise zone). The tax exemptions could be extended up to 30 years for invest- ments that exceed $400 million. So far, Bloomfield-based health insurer Cigna Group is the only By Andrew Larson alarson@hartfordbusiness.com B ob DeSantis is bullish about the future growth of data centers. He should be. His Norwalk- based company, 365 Data Centers, runs them and has grown into a $100 million business since he took over as an owner and CEO in 2017. DeSantis and two equity partners acquired 365 Data Centers in April 2017, when the company, based in San Francisco at the time, owned eight data centers spread across the U.S., including in major cities like Chicago, Detroit, Indianapolis, Nash- ville, Philadelphia, Tampa and New York state. "We had about 11 megawatts of power and 125,000 square feet spread across eight data centers," DeSantis said in a recent interview with the Hartford Business Journal. In November 2022, 365 Data Centers expanded by acquiring the U.S. colocation and network business of Sungard Availability Services. The company now owns and operates 20 data centers, with 80 megawatts of power stretched across its facilities, which span a total of roughly 1 million square feet. It employs more than 200 people. DeSantis estimates 365 is the 10th-largest data center operator in the United States, based on the total square footage of its locations. "But number nine is like 10 times bigger, and number 11 might be half our size," he said. "So, we're kind of in that top-of-the-little-guys, small-big-guys range." As demand for data centers to power artificial intelligence tech- nology grows rapidly, DeSantis said his plan moving forward is to expand methodically. "We have consistently been value acquirers, so we certainly are always looking at opportunities to acquire a data center, but we're very, very disciplined," he said. Rather than expand its geographic footprint, the company is focused on becoming a "very large regional player here on the East Coast," DeSantis said Seventeen of its data centers are in, and to the east of, Chicago. The company also has data centers in Dallas, Denver and Rancho Cordova, California. 365 Data Centers has 1,400 customers, mostly in the United States, including network carriers like AT&T and Verizon. The company is seeing top-line growth of 6% to 9%, after revenue lost from customer churn, DeSantis said. About 80% of its business consists of colocation hosting, which involves businesses renting data center space to house their own servers and equipment. The other 20% comprises network and cloud-based hosting. CT ties DeSantis, a Wilton resident, has held leadership positions in public and private companies. He was the chief financial officer of Frontier Communications' predecessor, Citizens Communications, based in Stamford, for 14 years starting in 1986. He also co-founded the company Xand, based in Westchester County, New York, which he helped grow into the largest private data center operator between Philadelphia and Boston. In 2016, he and his part- ners sold the company to St. Louis, Missouri-based TierPoint. Despite being headquartered in Norwalk, most of 365 Data Centers' operations occur outside of Connecticut. Of the company's roughly 200 employees, 14 to 16 work at its 365 DATA CENTERS' DATA CENTER LOCATIONS • Florida (3) • New York (3) • Georgia (2) • Pennsylvania (2) • New Jersey (2) • Colorado (1) • Illinois (1) • Michigan (1) • Virginia (1) • Massachusetts (1) • Tennessee (1) • California (1) • Texas (1) AT A GLANCE 365 Data Centers Industry: Data centers Top executive: Bob DeSantis, CEO HQ: 200 Connecticut Ave., Norwalk Employees: 200 Website: 365datacenters.com Continued on next page

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