Something in the air - cloud computing and its impact on real estate requirements | Fieldfisher
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Something in the air - cloud computing and its impact on real estate requirements

Gary Pickard


United Kingdom

Something in the air - cloud computing and its impact on real estate requirements

This article was first published in Estates Gazette on 14 May 2011.

Cloud computing Far from being pie in the sky, this concept allows businesses to maximise IT resources - but not without giving some though to the concrete effects on bricks and mortar.

Cloud computing is a phrase that you have probably heard a great deal in the last few months and will doubtless hear many more times over the years ahead. 

Put simply, cloud computing allows businesses to maximise their IT budgets by making the best use of their existing resources, or by buying only those that are absolutely need. What, though, does this have to do with bricks and mortar? The answer is that the servers that store and process the data have to physically reside somewhere.

The term is usually used in two senses:

  • The public cloud: Off-site data processing and/or storage facilities that are usually provided by third parties on an "as required" basis.
  • The private cloud: The on-site pooling of available computing facilities.

Why use either cloud?

In most cases, businesses will be looking to save costs. However, a more rational use of resources will also have significant environmental benefits.

The use of public cloud facilities is similar in character to outsourcing, in that the customer is buying a product in the form of data storage and/or processing. How this product is delivered is largely at the discretion of the provider, which saves the customer from having to invest time and resources in providing and maintaining its own IT infrastructure. In contrast to traditional outsourcing, the customer will usually only pay for the data storage/processing as and when required. It does not have to maintain systems that lie idle for most of the time.

If a business opts for the local, private cloud, it will have to maintain the IT infrastructure. The aim here is for the business to increase the efficiency of the systems that it already has. By pooling any available computing resources, overheads can be minimised in that:

  • the amount of equipment used and to be maintained will be reduced;
  • energy consumption will fall; and
  • old and unreliable equipment can be decommissioned or virtualised on more modern and reliable hardware.

How does this affect real estate?

The private cloud structure will prove less of a challenge to a facilities manager. The problems facing a business will include ensuring that should IT equipment be centralised into one or more server rooms, the property will be able to handle such a concentration.

IT equipment is high levels of waste heat; this has to be minimised so that the equipment can continue to run and the property as a whole does not become too warm. At the moment, there is only one practical solution to this problem - introducing a plentiful supply of cold air to the servers and extracting the hot air. The equipment can also be surprisingly heavy; back-up power supplies are, essentially, complex lead/acid batteries.

The public cloud presents a different challenge - 100% data connection. If business-critical data processing and storage is off-site, then it will be essential to be able to access to that data. A simple solution might be to use multiple telecoms providers. However, this will help only if the cables are run within different ducts, Many clients will seek the assistance of a telecoms specialist in the help of contingency planning.

Potential headaches

A reconfiguration of IT infrastructure, on site or off site, brings with it a number of potential headaches, more so for the tenant occupier.

All parties involved will need to consider the following points:

  • Is new air conditioning equipment needed required and should this be sited externally? If so, planning consent may be required, which will lead to inevitable delays.
  • Is the property physically capable of housing a concentration of IT equipment? Will it be necessary to obtain a structural surveyor?
  • Where will the telecoms cables enter the property? Can this be along completely different routes?
  • Who can offer the telecoms services and, perhaps more importantly, in what time-frame? The installation of new telecoms connections can take up to six weeks or more, even in major cities.
  • Is a non-cable based back-up needed, such as mobile broadband or WiMAX?

The tenant occupier is likely to have to deal with additional issues:

  • Will works require landlord’s consent?
  • Does the lease require the landlord to act reasonably?
  • Are any works required in parts of the building that do not fall within the demised premises? If so, does the lease contain rights allowing such works to be undertaken?
  • If the cabling enters a central telecoms room, is this sufficiently resilient? Who has access to the connections and any equipment in that room?
  • Is it necessary to secure rights for telecoms operators to run cables into the building and to the property? If so, will the landlord grant these?
  • If the landlord insists on the reinstatement of the works at the end of the lease, does this render the project cost-effective?

A landlord or its agent should consider the following issues:

  • Are the premises already served by independent data and telephone services, or will these need to be provided?
  • Will a concentration of IT equipment in a server room adversely affect the building's air-conditioning systems?
  • Is it happy for the tenant to install new air-conditioning equipment in the building? If not, where should this go?
  • Does it mind if the tenant runs new cabling inside the building? If not, where should it go?
  • Is it willing to grant consents for telecoms companies to install cabling if the tenant is willing to provide a full indemnity in this respect?

Physical dimension

As a result:

More businesses embracing the potential for e-commerce;

IT budgets continuing to be cut to the bone; and

The realisation that businesses need to take effective measures to secure their business data and not just physical assets; cloud computing is set to remain on the scene for years to come. Parties remember the physical dimension to accommodating the "cloud", which needs to be borne in mind as part of the project planning process.

Case study

ABC, a financial services company, needed to move to new offices at short notice because it was unable to agree a new lease with its landlord. The new premises were located in an adjacent street in the West End and formed part of a larger area that was now surplus to the new landlord’s needs. The nature of ABC's business meant that much of the business-critical information it required on a daily basis was sourced from external parties. It required access to various internet-based dealing platforms and the secure, off-site back-up of confidential data.

Despite the proximity of the two sites, ABC was unable to transfer telephone numbers because the telephone exchange was full. It was quoted a 90-day connection period for the new telecoms lines because the new building was not configured for multiple occupation. Since the landlord remained in occupation of other parts of the building, it not laid on data connections to the premises but had merely severed its own network connections to the space.

Given the hurdles being raised and the fixed time-frame for resolving them, ABC decided early on to employ an IT and telecoms specialist. 

The move went smoothly because:

  • The telecoms specialists was familiar with the requirements of investment landlords and could provide clear information packs to inform the landlord as to what was being proposed.
  • A WiMAX internet connection via an antenna on the roof of the building. The works needed landlord’s consent but not planning consent in this instance.
  • The use of mobile broadband connections for certain non-business critical systems in the short term.
  • The telecoms specialist ruthlessly chased down each element of the supply chain.

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