The Euro Market & What to Expect in the Industry in 2023

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Andrew Jay, Executive Director of Data Centre Solutions, Advisory & Transaction Services EMEA CBRE, talks about what to expect in the data center industry in 2023.

Raymond Hawkins: Welcome to another edition of Not Your Father’s Data Center. I am Raymond Hawkins, your host, and we are fortunate enough to be joined for a second time by Andrew J, our friend in London with CBRE, I believe head of Data Center solutions for [inaudible 00:00:22] for longer than he may want to admit, but a few decades. Andrew, how you doing?

Andrew Jay: I’m good, thanks, Raymond. Very good indeed. How are you?

Raymond Hawkins: We are good. Thank you so much. I know my team gets upset with me when I date these, but so I won’t date them, but we’re recording here in the fourth quarter of 2022 and the economy’s gotten a little soft on us and interest rates are going up and I think there’s lots of questions about our business. So as I think about things that would love to chat with you about Andrew is how to, everyone talks about flap or FLAP-D. Love to hear how the big markets are handling the incredible growth we’ve had the last couple years. Love to talk about the second tier markets over there a little bit and love to talk about how my friends on the other side of the big water are viewing, I don’t want to say we’re in a global recession yet, but certainly we’re in a little bit of a slowdown. So love to talk about all three of those at a high level. Andrew, if you’d love to tackle any of those in order. But before we get into those business things, love it if you’d remind the folks that have not, who have heard you before or this is their first time, a little bit about yourself. That’d be great.

Andrew Jay: Wow. Yeah, so very un-British this bit, a little bit about myself. Yeah, I’ve been at [inaudible 00:01:40] very a long time, but I know you said talk about my family and things. So I’ve got, I live in London, near London, just outside up in the countryside, about a 30 minute, 30 mile journey into Central London. Takes me about an hour. I’ve got a wife and two fantastic kids, two boys, Harry and Ollie. They are 19 and just about to be 21, so an interesting time for them. And I enjoy-

Raymond Hawkins: University for both of them at that age?

Andrew Jay: Yeah, yeah. Well one’s at university studying psychology and the younger one has just done, what we call our A levels prior to university and he’s having a year out. And so he’s doing some more exams and he’ll be getting a job and all those sorts of good things before going to uni in about a year’s time. So yeah, all is good.

Raymond Hawkins: Excellent. Yeah, we call that a gap year over here and both of mine graduated young, graduated at 17, so they took time off between high school and college. So I hear you there. All right, so you live in north of town in the country, wife and kids. Do you want to get into the details around your football club? Do you have one? Let’s get right down to the nitty gritty arsenals at the top of the table. They’re squawking a good bit. Does any of that move you or do you not care?

Andrew Jay: So not particularly, but I was born in Yorkshire, which is one of the counties of England in a place called Sheffield. And for any football fans out there, we’ve got two big teams. Sheffield United and Sheffield Wednesday, so I was always on the Sheffield United side, but Wednesday always seemed to perform a hell of a lot better. So I think I made a poor choice there, but it’s not something I’m looking at all the time. My powers that I cycle with and things, they’re always chatting about the football and I sort of glaze over a little bit at that stage. But yeah, it’s something for everybody.

Raymond Hawkins: Gotcha. Well tell us now, you’ve opened the door now, tell us what bike you ride.

Andrew Jay: This is a cycle. I so heavily into my cycling that I actually have a bike, I don’t even know what it’s called, a pal of mine who’s really into his bike, Kenny, he was showing me his new super duper bike, I don’t know what it is, but it cost him thousands. And I said, well, what’s wrong with your old one? And I ended up in that conversation putting his old bike in my car. And so I’ve got his secondhand bike, but we’re going in a recession so you’ve got to tighten your belt, haven’t you?

Raymond Hawkins: Brilliant. Yeah, yeah. So I’m a specialized guy so I ride the specialized tarmac, SL four, this my third specialized. So yeah, I love the social aspect of riding the bike. During the week, I go out by myself and I probably don’t want to do any more than 30 or 40 miles on my solo days because it’s just too boring by yourself. But I love the weekends when you can spend two, three hours chatting it up with a peloton of guys and getting a ride in. So I really, really enjoy it.Andrew Jay: Yeah, that’s me. It’s the chat and then the bacon sandwich and the coffee at the end after a couple of hours. That’s what it’s all about.

Raymond Hawkins: That’s right. And you don’t feel guilty having a big breakfast after the ride. You’re like, look, I just did 50 miles, I can eat whatever I want.

Well very good. Well, Andrew, glad to hear that we’ve learned you’re a Sheffield United guy, you’re a cyclist, although a frugal one, which is wise because I’ve got friends that have $30,000 bicycles and I just can’t even imagine. I’m like, why would you, that bike’s not going to make you that much faster. But boy, I have friends that really get nuts. I have friends that have three, they have their flat road set up bike that’s 20 or 30, they have their mountain climbing bike that’s 20 or 30,000 and then they have their TT bike. I’m like, guys, do you really need $90,000 worth of bicycles? Stop. It’s ridiculous.

Andrew Jay: It’s a lot of bike. That’s my goodness. I can’t even imagine it.

Raymond Hawkins: That’s a lot of bicycle. Those are my friends who don’t have kids in university, that’s for sure. Well, Andrew, thank you for letting us learn a little bit about you. We enjoy that. You take the other ones in whatever order you’d like. We’d love to hear about the big markets, love to hear about tier two and love to hear about how Europe is thinking about where we are in the economic cycle, the business cycle, it appear US is tightening. You guys, I know the pound has gotten a little bit weak lately and there’s been some tumult in your government as far as banking systems. So how’s the world looking at, how’s the rest of world looking at the economy? Any of those three you want to take first? That’d be great.

Andrew Jay: Yeah, I guess it all pushes down onto the data center market directly. So I thought we were pretty insulated from the downturn in say the industrial logistics market, which seen an absolute downturn, a real pounding. And I thought the data centers were doing all right actually just because of our underlying demand from the end users. But actually that’s now starting to percolate through, particularly for the investors. So we’ve had one investor pulled out of two of our transactions where we’re selling data center investments and their reason was they just said, look, why would we buy now when we can buy in a year’s time at a lower rate, a lower entry cost, and have lower costs of debt? And it’s difficult to argue against that. So I think the investment markets certainly have a downturn and if you just look at the quoted developer operators stock prices, that’s a pretty good indication as well. There’s been a lot of value degrading out there in the last few months, but it’s not often that we’ve got the, from a UK perspective, the Brexit fallout. We’ve got an awful war on our doorstep, first real one in my lifetime that’s close to home. And of course we’ve got the shakeout of the two years of the pandemic. So it’s a pretty amazing set of circumstances that we’ve got that we’re living through at the moment.

Raymond Hawkins: So, Andrew, and I appreciate you being willing to take not really data center subjects and talk about them and give our listeners perspective from Europe, which we really, really appreciate. You hit on some big ones, the post the pandemic, the war in Ukraine. There’s talk here in the US about concern for the energy across Europe through the winter, and how that impacts our data center business. If we end up shortages on fuel and we need to be on generators and we’re getting asked those questions by all of our customers, how is that getting discussed and how’s that viewed from a macro business cycle sense but also from a data center sense worried about fuel and energy and heating well and those kinds of things through the winter?

Andrew Jay: So it’s a massive concern for everybody in that such a large quantity of our gas was coming from Russia and that’s pretty much stopped now. I think Germany, something like 40% of their energy effectively was coming from Russia. I may have that slightly wrong, but in other words it was a massive, massive amount. And so we’ve got some real challenges on the energy side and I think there’s a lot of energy out there, but getting it distributed around to the places that need it is really tough.

So if I talk from a UK perspective, so I actually shared a meeting with one of our government departments just two or three weeks ago specifically saying, look if, and it’s a big if, we mustn’t overdramatize this or panic people, but if there were to be any kind of rolling power outages in the winter, and I think it’s doubtful we are going to have them, but we have to prepare for them and we are talking about it and the government department was saying, well look what’s what’s impact on the data center side? And we say, well don’t worry about the data centers. It’s what happens inside them that you’ve got to worry about. It’s the financial markets, it’s the traffic lights on the streets, it’s the health service, it’s everything. So I think the view is that, look, the data centers are designed to operate off the main’s power. That’s the point of having the redundancy in resilience.

Raymond Hawkins: So you mentioned prioritizing diesel, and to your point when I talk about let’s keep the data centers up, it’s not so our businesses can run. I think you make a great point. It’s so that the businesses that we serve, the crucial critical systems — hospitals and lights and transportation — all the things that run in our buildings, all the logistical things that run out of our buildings, that stuff needs to keep running and we’re really, for lack of a better term, we’re kind of the utility provider. We provide the environment for all of those services. And thinking about diesel fuel, that was probably my first thought is, hey, is there going to be sufficient diesel fuel for us to be able to operate offline if we lose utility power? And it sounds like you guys are already ahead of that and already thinking about that and winter presents a problem here but not quite on the same scale that it does in Europe.

So good to hear that y’all are talking about it and thinking about it. And also want to remember that we wish that we weren’t at war, we wish that there wasn’t a war going on to cause these kinds of problems either far, far more serious humanitarian issue than, but we do need to think about running the businesses while that’s going on. All right. Yeah. Well thank you for talking about that as a macro problem. How do you guys, and I’m not necessarily asking you to speak for CBRE, but how do you guys feel about slow down, I appreciate you mentioned and some projects have slowed down or investors have pulled out. Do you think this continues for a while? Do you think this is short-lived? What’s your thoughts on, I look back and we’re coming out of two years of just crazy demand for what we do because of the pandemic and the work from home economy. And I don’t think that trend can continue, but I’m with you. I do feel like there’s some level of insulation in our industry. People aren’t getting less, aren’t spending less time on the internet, they’re not getting a less digitized future. So I don’t know, it might just be a slow in the growth.

Andrew Jay: Yeah, I think looking at the macro side, and I’ve got no crystal ball, but the interest rates, so our interest rates in the UK, the Bank of England raised them today literally just about three hours ago by 75 [inaudible 00:13:15] points. So that’s the biggest single rise we’ve had in our base rates for something like 20 years plus. And so it’s that cost of borrowing that it gives us the real impact. And so when is that going to change? Well our current view on the data center side is we’re probably going to see some further increases and we’ll probably see it peaking in quarter two of next year before it then starts to come down. And a lot of our financing for the data center project and general property lending is linked to the swap rates, often the five year swap rate. And so we’re looking with our economists as when that’s going to start to come down, I think towards Q2 and middle of next year that should start to come down.

But it’s other things as well because we’ve got the loan to value ratios have come down significantly. We were at 70, 75% loan to value, now we’re down at 60% if you can get it. So actually getting access to those more expensive funds is becoming pretty tough. And the loan premiums, the risk premiums on these loans are going up significantly as well. So where if you go back 12 months, there were quite a few people in the market who perhaps haven’t got massive track records but they may have had a really nice piece of land. Those people are struggling now to be data center developer operators. And we’re almost going back to the really established companies who have got revolving credit facilities and deep pockets. They can stick a lot on the balance sheet without it hurting too much and those people are really coming to the fore because of the economic problems. But do you want me to talk about some of the demand as well because the demand-

Raymond Hawkins: Yeah, yeah that happy to transition to the demand side but yeah, no, I love this talk about, completely agree with you that our fed raised three quarters of a point yesterday. Credit continues to tighten not only in what it costs but how much is available. I mean almost exactly the description you gave for there in UK and in Europe. So very similar view here. Harder to get money, going to really, really tax the guys that don’t have the balance sheet or the track record to withstand the tightening credit policies, the limited amount of funds or the increased cost of the funds that you can get it. It’s going to be tough for the guys that are fairly new to this business or have a fairly small portfolio, it’s going to get really, really hard I think. Yeah, love to switch and talk to the demand side. But yeah, I think this part to me is fascinating as well. The what’s going on and how future development gets funded.

Andrew Jay: And the demand, and I think you want to talk about some of the emerge, well secondary and emerging markets. So I’ll try and hold back from those all together at the moment, just talk about our FLAP-D markets, which I think everybody knows that’s the Frankfurt, London, Amsterdam, Paris, and Dublin markets. And we are continuing to see really significant growth of demand from the big hyper scalers as simple as that. So this year, 2022, we will see total take up for the year we reckon is going to be just shy of 400 megawatts of-

Raymond Hawkins: Oh my goodness.

Andrew Jay: -new data center space coming online in those four markets, those FLAP-D markets and the new supply is actually going to lag behind that little bit. And it’s one of the first years we’ve seen more take up than we have new supply coming on. New supply I think we’re going to be at about 380 ish megawatts coming on. So a little bit of a mismatch there, but it just shows how strong the demand is and that take-up is higher than it was last year, not by much but only probably 10 or 20 megawatts, which is nothing really in the scheme of 400, but there will be a slight increase. So we’re just in this new normal, it’s extraordinary. If you think back, gosh, six or seven years, a hundred megawatts was an incredible year, like a really incredible year above the long term average. And now we’re talking about 400, it’s amazing.

Raymond Hawkins: 800 over two years is just staggering. I mean that’s a staggering amount of growth in a two-year window. Just the fact that our industry could finance, the fact that our industry could build it, the fact that our customers could absorb it. I mean those are just incredible numbers.

Andrew Jay: And I know it’s not northern Virginia, but it’s a lot of megawatts and a lot of investment. But it’s getting, particularly in these FLAP-D markets, it’s getting more and more difficult to not just, because we talked about the funding elements and that’s getting quite hard, but finding land appropriate to build data centers on is becoming incredibly difficult because whilst we’ve got this high demand, it’s hugely polarized towards the existing availability zone. So you take all of our big markets, take Paris, take London or Frankfurt, you’ve got a tiny area which has the main availability zones and it’s those zones that are increasing in size.

We had always, I guess, hoped that the hyper scale would be able to say, fine, we’ve got a availability zone there in London, west London [inaudible 00:19:38], wherever, let’s now go to East London, build a new one there where there’s more power, more land. But that hasn’t really happened and they are very much focusing on these existing areas and it’s the same, the [inaudible 00:19:53], parts of Paris, and areas like that. And so we’re getting to the stage now where we are out of surplus power on the grid that’s available in the geographic areas that we have the availability zones. And so what that means is our lead time now in some of these big markets for power delivery can be as much as eight, nine, and 10 years, which is just ridiculous. Clearly no one can wait eight, nine-

Raymond Hawkins: Yeah, no one’s planning that far out. Yeah. Are you seeing it, Andrew, I know that, I mean I think it’s been pretty well publicized that Dublin’s [inaudible 00:20:35] with power for a while and I think your description, it’s amazing the gravitational pull around these AZs, right? And how much demand has to stay in that little submarket inside Frankfurt or London or Amsterdam repairs. Are you, in those little tiny submarkets, are you seeing any of them that have available little power growth or, and I’m not saying name them by name, but do you go, Hey Frankfurt’s, not as bad as Dublin. I mean how do you rank ’em as far as who’s going to be able to have some available power? Because we see the exact same description, I mean 4, 5, 6, 8 years and we just can’t plan around that from a power delivery perspective.

Andrew Jay: We’re in an interesting time at the moment because a lot of developer operators of data centers, but also traditional real estate companies twigged let’s say a year, 18 months ago. How do you leverage value from your real estate for data center? Well you get a zoning permission on it and you get the planning permission, sorry, and you get the power reservation, so assuming the place is in the right location and the locations we’re talking about. So what those companies have done is put these massive power reservations into our national grid. In the case of the UK, exactly the same dynamic in the other countries. And we’re in that sort of shakedown period at the moment where a lot of power has been tied up but hasn’t yet been used. And so there are sites that are being traded on the back of having a power reservation attached to the site itself.

And that’s just mad and we’ve never had that before, but that is what’s happening. So the answer to your question is we’re in a shakedown period at the moment where the currently tied up power is gradually being used up. That’s going to take probably a year to two years, probably a good two years in fairness. And then we really, really are out of power in these areas. And so it’s at that point that we will have to then leapfrog and I think this is what’s going to happen, it’s going to leapfrog to somewhere else. And I think they’re probably going to go to take a much, much broader view and say, look, where is there a large amount of power? If we can get green power then that would be fantastic. Where is there a lot of land and how can we match up all of these factors and go somewhere where we can start to build some just really big campuses rather than the sort of hand to mouth existence that is the case at the moment where you choose a highly populated, very, very busy real estate market to grow in.

Raymond Hawkins: Wow. Andrew, you said something there that land is trading based on the power commitment or the power contract or the power availability. Someone’s tied up that commitment with the generator or the service provider, that that’s become the long pole in the tent. It’s just unbelievable. It’s really, really shocking that that’s, but it’s true. The power demand is so big for our customers that I tell folks all the time, my customers ask five questions, they ask them in order and they ask them every time, are you in the right market? So are you in the right AZ, can I put the pin where I want to put the pin? Can you get me the capacity I need when I need it? And can you show me how I can grow to the size I need to grow to? Those are the first three questions. And they’re all around power.

I mean yes, location matters, but the location only matters if there’s power to do question two and question three. And yeah, it’s fascinating to hear that land is trading based on power commitment and you also nailed it because once we get all the power we can get out of the grid in let’s say a London, I don’t know who the name of your power provider off the top of my head, but they’re not going to build another 30% of infrastructure in [inaudible 00:24:55], right? That’s not happening. There’s just not capacity for it. So your idea that we’ve got to jump somewhere else I think is dead on. And I think your timing’s right too. Two, three years from now we’re going to be asking, okay, where can I develop to support Frankfurt that’s not Frankfurt? Where can I develop to support London that’s not London? Because we’ve just about tapped out what the energy providers can give us here. Fascinating stuff.

Andrew Jay: And I think also there’s some concerning effects as well. So I’ve got one public authority in West London who have come to me and said, look, we can’t build the houses that we need because the housing developers who are building big blocks now want electric vehicle charging points, which they have to have, that’s a planning regulation. They have to move in this case to air source heat pumps to reduce the reliance on gas. So their total domestic power consumption is at least doubling and some. And so suddenly these people wanting these big blocks are saying, well we now can’t get the power because we’re in the queue behind the data center people. And so the planners are saying, well, we’re not going to give permission to build the data centers if the data centers are gobbling up the power and we can’t house our people. So there’s a huge number of effects of all of this.

And what we are trying to do is very much bring the end users to the table with the public authorities and say, look, how do we sort this out together? All of these people want to be using social media, they all want to use the benefits of data centers, but we’ve got to co-exist well together. So we are trying to do that at the moment, bring some of these groups together. So things like district heating systems is one thing that we’re looking at heat as a byproduct of the data center, feed it into a district heating system, put it into these blocks of flats and reduce their power load as a result. And it’s a lot more environmentally friendly. So there’s loads of stuff that we’re doing, which I never would’ve dreamt of been involved with just two years ago.

Raymond Hawkins: Yeah, great point. You hear in our industry, oh my gosh, you guys use a lot of power. Your industry’s not green enough, you’re not responsible enough. And I think that the phrase “data center” folks don’t get what that means. So I try to tell folks all the time when they ask what I do for a living, I just say, Hey, hold up your cell phone, that’s what I do for a living. Everything that goes on in that phone happens in a data center. Everything on your phone. And because I think to your point, folks don’t want to get on Snapchat less or Instagram less or order their food less or chat with their friends less, or order a ride or any of those things. They want all of that incredible convenience at the end of their hand. Well that runs in a data center.

That’s what a data center is. And I think we as an industry have to do a better job telling folks we’re the guts of everything you do right here and you don’t want to go back to a flip phone. I’m pretty sure. So let’s figure out how to make this work together. Absolutely. So well let’s take a few minutes if you would, Andrew, and talk a little bit. I love this big picture stuff. This is so good. Really, really helpful from an understanding and perspective. Would you talk a little bit about what we might consider tier two outside of FLAP-D? What’s going on in the rest of the continent? I think of cities, whether it’s Rome or Berlin or Prague or Madrid or Milan, what are some other things happening out there?

Andrew Jay: So there’s a heck of a lot happening and certainly whilst our focus has always been front and center on the FLAP-D markets, we’re seeing as much growth in absolute terms in the tier two markets. And I almost, I’m reticent to call them tier two markets now. Just all of those other markets now are getting availability zones in them. So yes, Italy and Milan and Madrid in Spain, the Switzerlands are very well established. But now we’re starting to see the Belgiums and the Finlands, Warsaw in Poland. Austria has got a zone announced. Greece, I mean who would’ve thought it but good on Greece. There’s one there, Norway and Denmark. I think we did top them up and there’s 55 open or announced cloud zones. So public knowledge announced zones, 55 now in Europe, which is extraordinary. And if you go back two years, I don’t know what the number was, but it was nothing like that so-

Raymond Hawkins: It wasn’t even close. It was probably in the teens. It was probably in the teens three years ago.

Andrew Jay: So the journey has definitely gone from, yeah, okay, we’re anchoring in these big markets. They were then starting to go into what we call the tier two markets at the time. And now all hell’s broken loose and we’re going everywhere because at the end of the day we’ve got latency issues and we’ve got data protection issues, which mean that if you want to provide the quality of service, which the big hyper scalers do to government, big companies as well as then some of the private individuals, you’ve got to be in region. And that’s the thing that’s created this localized demand.

Raymond Hawkins: Yeah, yeah. Boy that’s, I didn’t even open the [inaudible 00:30:54] wide enough. I didn’t think about it, right. Norway and Finland and Austria, I mean it’s going on everywhere. And not only the data sovereignty, data privacy, data protection, all of that, every country’s got a slightly different view on it. It’s fascinating to see how quick it has gone. I mean to your point, 55 announced cloud zones. I had no idea the number was that high.

Andrew Jay: And just looking at that numbers wise, Raymond, so I think by the end of next year, so end of ’23 because we’ve got really good line of sight to exactly what’s been built, anything coming on next year is under construction now. So for the end of next year in those FLAP-D markets, there’ll be three and a half thousand megawatts of IT capacity in modern [inaudible 00:31:41] facilities. In that same period, we think there’s going to be another two and a half thousand megawatts in all of the other locations. This is total capacity that makes six gigawatts. So three and a half in the flaps, two and a half gigawatts elsewhere, six. And that is starting to be a huge number. So if you look at that two and a half gig in the secondary markets compared to the flaps, you can make a hell of a living getting involved in that loss.

Raymond Hawkins: To your point, I’m not sure we should call them secondary anymore to two and half gigawatts of capacity. Yeah. And to think about that, we’re looking at, take Madrid, a market that’s probably going to be in the 250 or 300 megawatt range fairly quickly to the fact that we’re saying that second tier two market, I mean it’s getting big everywhere. That’s the simple way to say it’s shockingly big everywhere.

Andrew Jay: Yeah, I think Madrid will be 170 [inaudible 00:32:46], 172 megawatts I think it is by the end of next year.

Raymond Hawkins: And that’s what we’re, not far from two and change. Yeah.

Andrew Jay: No absolutely. At the end of 2021 it was 77. So it’s 125% increase over two years, which I appreciate. It’s coming from a relatively low base but, and that’s 172 megawatts is a lot of megawatts and it’s cause it’s growing. That’s actually delivered capacity. Like at Milan will have gone from I think 85 to 150 megawatts and even the likes of [inaudible 00:33:23] and Vienna, there’ll be 50, 60, 70 megawatt markets. That’s where there’s some real action taking place.

Raymond Hawkins: Yeah, unbelievable. The numbers continue to be shocking everywhere and we’re really talking North America and Europe there. There’s a lot going on in Asia as well. And I think [inaudible 00:33:47] and Africa are coming not that far out either. I’m not going to broaden the spectrum of our conversation, but we’re really talking North America and Europe. I mean there’s a ton going on in Africa, there’s a ton going on in [inaudible 00:33:59] and a ton going on in Asia. It’s truly incredible the trajectory of the industry that we both get to be in and certainly expect a little bit of a slowdown but not in our space for a while. That’s for sure.

Andrew Jay: So Martin, just my quick anecdote on Africa as you raised the subject was, and I went out there a few weeks ago because a year ago we had no data center live instructions as CBRE there. Today we’ve got nine. So we’re either buying or selling land in nine specific cases. And it’s not all South Africa. We’re into Kenya and a lot of the new markets. And I have to say when I went out there toward the [inaudible 00:34:50] facilities and things, which I last toured probably seven or eight years ago, and they are ginormous and they are a fantastic quality. It’s exactly what you’d expect anywhere in a really modern location. So yeah, I think Africa’s really interesting, but it’s tough to do business there. Hugely tough. And it’s a different world to mainland Europe from a doing business point of view. So yeah, it’ll be fascinating to, I know perhaps if we speak in a year’s time, see what’s actually happened over there.

Raymond Hawkins:

Well boy, we would agree with you. It has changed dramatically. We are doing work in Africa and to your point, it’s not South Africa, you can’t support the continent from South Africa. It is going to be multiple markets and a growing market. And when I think about the future of our industry, the future being 10 years from now as I approach retirement, I think it’s going to be an incredible market Africa for, just because it continues to modernize and continues to grow and their economies continue to grow. It’s going to start to look like, I’ll just one personal anecdote. The first time I went to Africa on a mission trip, I was fascinated. We fly in and land in a dirt runway and take a cart off into the middle of nowhere and walk into this village where we’re staying for the week. And a woman walks up to me with her cell phone and the town has no two-story buildings, it has no sanitation, it has no plumbing, it has no electrical generation.

And I was like, how are you on a cell phone? And she’s like, oh, we have a cell tower and it runs on a generator and we all charge our cell phones off of car batteries. We just skipped over the landline phase because there was no point in building a landline network there. And I think we’re going to get a little bit of that, right. I think we’re going to get that in the data center business where Africa’s going to get the latest, greatest, and the best because they don’t have to live through all the legacy of how we built our data centers here for the last 25 years.

Andrew Jay: Yeah. And it’s that young, massive population. And there’s an amazing map that one of my colleagues did where he had a map of Africa and then he put the whole of the United States into it, the whole of China and the whole of Europe and they all fitted perfectly and there was plenty of space left over and people, myself included, have absolutely no idea how big the place is. But that young population, high propensity to use technology and particularly cell phones, the issue is GDP. And so this is the big, big question is what point does their GDP take off, which will then allow the purchase of some of these more IT and data center heavy services. Anyway, we’ll cover that one later.

Raymond Hawkins: Yeah, well Africa will be a fun subject first in the future. That’s a good one. Boy, I completely agree with you. I think it’s a fact that a lot of people don’t know most maps of the globe actually shrink the size of the continent of Africa just to make it fit. And I will tell you, having been there and flown in small airplanes over the continent many, many times, it is so vast. It is unlike any place you ever have seen it. The vastness of Africa is just unbelievable. So I know what our next podcast will be. We’ll talk about the African continent and the markets there. Andrew, I really appreciate you taking time. This has been great. Always impressed with your knowledge and your professionalism and your experience and helping us understand the market a little bit better. And good luck to you and to CBRE, our friends there, and to you and your family headed into the holidays. We always appreciate it. Thank you so much.

Andrew Jay: Thanks, Raymond, really appreciate. It’s been a pleasure.

Raymond Hawkins: Awesome, Andrew. Thank you.