Project development is the tip of the spear for CyrusOne’s organic growth, and its role in the data center industry will only become more vital, CyrusOne Vice President of Project Development Lindsey Bruner said at the Bisnow Datacenter Investment Conference & Expo (DICE) South conference in Dallas.

On Oct. 14, Bruner joined the “Strategic Site Selection: How Tier II and Tier III Markets are Augmenting the Texas Market” panel, which included Legacy Investing President and Co-founder Daniel English, Aligned Chief Financial Officer Anubhav Raj and Goldman Sachs Vice President Jeff Ferry.

Moderator Miles Loo Jr., executive vice president and global lead of Valuation & Advisory at Newmark Knight Frank, first asked the panel to explain how involving design-and-build before breaking ground and deploying capital leads to success.

Bruner said the key is to involve all project stakeholders up front or as early in the process as possible, especially given the many challenges the data center industry currently faces.

“We’ve talked about how constraints in power and supply chain being ‘gating’ items to project delivery is not something any of us would have thought of even a year ago,” she said. “But, knowing those constraints internally and also maximizing what you can get on a piece of land up front and having that information up front, it really just makes for a much more efficient process. And obviously the goal of that efficient process is to deliver your product to your customer on time. The more communication you have up front, the better the project goes all the way through.”

Build-to-suit projects for multiple-megawatt customers have become more common, Loo noted. In this model, sometimes large customers pre-lease an entire building customized to their specific requirements. This allows developers to reduce their risk, as a pre-leasing makes data center projects easier to finance. Loo wondered if there are trends driving any changes in this strategy.

“Bigger, faster, more – growth in the space and in the size of transactions,” Bruner said. “The number of those larger transactions over the past few months has really been staggering. It forces that adjustment of your strategy to, where can I find land and power that are going to meet this requirement? And then, how do I fit this timeline? But those are great deals to have. Obviously, pre-leasing takes a lot of risks out of the equation for us.”

Declining rents have been another ongoing trend, prompting Loo to ask what has caused the decline and when rents will hit a rock bottom. It’s partially a supply issue, Bruner suggested.

“It’s definitely negotiating leverage of those bigger deals and they’re looking for lower prices, and there has been in some markets enough of the supply overage that they’ve been able to play around and get a lower price,” she said. “Have they hit complete bottom yet? I don’t think so. I hate to say that, but I think there will be a leveling point at some point and it’s going to be because the co-location providers push back. ‘Well, we’ve hit the limit of where we can underwrite this and still meet our thresholds.’”

Looking ahead, Loo asked Bruner about the future role mergers and acquisitions will play for CyrusOne.

“We’ve got a really strong presence in the key markets in the U.S. and the FLAP-markets (Frankfurt, London, Amsterdam, Paris and Dublin) in Europe,” she said. “That’s going to continue to be a focus developing those long-term holdings in those areas and looking to enter key new markets that we would term digital gateways. Madrid is probably our newest entry into Europe, in that respect.”

But sustainability will also remain an important focus in the future, she emphasized.

“We’ve made a pledge to be carbon neutral by 2040, which is an enormous undertaking,” Bruner said. “And there’s a lot of different strategies we’re using to develop that. But probably the biggest one is partnering with our customers and looking at their own sustainability goals and how can we help them achieve those goals.”