1 Comment

Summary:

Companies that rent out data center floor space to companies are seeing their business boom as more services move to the cloud. Yet, not all markets or players are created equal.

peering equinix carrier fiber cables
photo: Jordan Novet

Believe it or not, there is a glut of data center capacity in London, New York, Frankfurt and Paris, according to research out Monday from analyst firm Telegeography. The report notes that vacancy rates in those markets are now at 40 percent. Meanwhile cities such as Seattle, Dallas, Toronto and Paris are seeing new data center construction at a pretty rapid clip, with those cities having a total of 8.1 million square feet of floor space between them. For perspective, however, the world’s largest city for co-location space, New York City, has 5.5 million square feet of space.

colospace

Wait, Paris is experiencing both high vacancy and a 25 percent growth in new square footage? Paris now has 2.6 million square feet of co-location space. TeleGeography analyst Jon Hjembo explains in the release why this contradiction really isn’t:

‘However, vacancy rates fluctuate widely within metro areas. Colocation sites that are in high demand have consistently limited or non-existent availability, warranting expansion, while operators of other sites may struggle to gain a foothold.’

Much like in other businesses, if you’re good, you have customers and if you’re mediocre, unknown or too far off the metro fiber ring, you’re experiencing vacancies. Plus, if you’re a city that has a huge co-location market, it will be harder to grow the overall square footage. After all data centers consume a lot of space and power, plus you’re growing from a larger base.

As we shunt more of our lives to the cloud the demand for data center space has gone up. But unless you’re a web giant building your own data center from the ground up isn’t really an option. So companies rent space for their servers in data centers owned by Equinix, NTT, Switch and other large co-location providers.

But leasing data center space, like much other estate is all about location. The closer your servers are to the end customers, the faster it is to get information to them. Generally it’s cheaper too, especially if you’re with a large data center provider who can offer a customer a wide variety of choice in bandwidth and other services.

So as demand for online services grows, we expect the growth in data center co-location offerings to grow in more places.

  1. It’s not that hard to understand why at all… Cost of power is the single largest expense for an operator. Then equipment, then taxes. If you operate where there is inexpensive power (Washington State) vs. where it’s expensive (NY State) it’s a simple explanation.

    Looking at available space vs demand is also skewed by time. It takes 12-24 months to build out space for most operators, while research looks at today’s vacancies. Granted most of the building is for expansion of existing customers vs. to service new ones, at least historically, but the time lapse skews all of it. I know because I did a study and found this out in the process.

    Lastly – square feet doesn’t mean anything anymore. It’s megawatts (MW) of inventory expressed as capacity or load. I can fit the equivalent of 5,000 square feet into a 960 square foot box today because power densities drive data centers.

    mark@blunthammer.com

    Share

Comments have been disabled for this post