I switches my VM's from VMware Paravirtual to LSI logic SAS and VM's are responding normal again.
The behavior I observed was normal latency when booting then (after a burst of high I/O) latency remained high (2000-3000ms constant with 100% disk activity according to task manager)
VM:
Microsoft Windows Server 2016 (64-bit)
VM version 13
VMware tools 10.1.5 (5055683)
Hosts:
1 x HP ProLiant DL360 Gen9 (HP image updated to VMware ESXi, 6.5.0, 5310538)
2 x Supermicro SYS-6018U-TR4T+ (updated to VMware ESXi, 6.5.0, 5310538)
Storage:
Superserver 2028R-E1CR24L (12x1TB SSD RAID10, FreeNAS)
All storage via iSCSI over 10Gbit copper via a Netgear XS708E
Normal performance +- 1200MB/s, iops (4k 64thrd): 135000 read / 52000 write