With last weeks opening of both the Telehouse West Docklands site (200,000 sq ft) and Equinix’s second Slough facility of some 300,000 sq ft, there would appear to be quite a deluge of new capacity in the London market, but it’s worth looking into the headline grabbing numbers to understand the real impact on the market.

Looking at the statistics behind the recent announcements gives a better overall view, as the table below shows:

So yes, the total, gross overall space from the two new facilities is indeed some half million square feet, but the gross figures represent the entire building size including areas like plant rooms, corridor space, offices and so forth, a lot of which of course is not for housing IT equipment .  Our preferred measure of data centre space is to use “net tech”, or the net technical area, ie the actual amount of colocation space that can be sold and occupied by clients.  Net tech is the most conservative and accurate way to measure data centre space.  As you can see from the figures above, the total amount of “net tech” from the two new sites is only 200,000 sq ft, substantially less than the total gross area.  The Telehouse West building in particular would appear to offer a very poor ratio of net tech to total gross area, but this reflects the nine story nature of the building built on a very tight plot on Telehouse’s Docklands campus, whereas out in Slough Equinix’s huge new facility is spread out on a vast area an across two floors, so offering a much more efficient layout. 

Our current estimate of the London carrier neutral operators gives a total floor area of some 1.58 m sq ft of net technical space prior to these openings, so the total net tech from the two new sites will add 200,000 sq ft to this figure, or an increase of 12.6%, but the initial first phases are only 55,000 sq ft of net tech in total, so adding only 3.5% of new capacity.   Our current estimates are that overall London’s carrier neutral space is probably some 90% occupied at present, across the 19 facilities available prior to these latest two openings, thus suggesting the amount of space available (ie not already occupied) was only 158,000 sq ft and thus the addition of a further 55,000 sq ft can be seen as a useful contribution to capacity overall.   

The big operators have capacity now and a pipeline for the future

We believe these two openings serve to reinforce a message we have been talking about for some time now, that the space crunch the industry faced in 2007, when rising demand for colocation met a fixed supply of stock, is now well behind us and that the industry is in much better balance overall.  For example, clearly both Telehouse and Equinix can deliver further substantial phases of both Telehouse West and Equinix LD5; elsewhere, Telecity still have a reasonable chunk of Powergate left and whilst there’s been no official announcement are believed to have identified further space for expansion nearby in Park Royal.  Interxion are also known to be looking to expand further in or around Hanbury Street, though perhaps these plans are less clear at this stage.  But the main point is that unlike 2007 not only do we have capacity available today, we can also see a further pipeline of capacity that can be brought into production, thus the chance of suddenly hitting a fixed ceiling against rising demand is now highly unlikely.   This message was reinforced by Eric Schwartz’s presentation at Data Centre World (see our separate post on that), Eric is President of Equinix Europe.  In his presentation entitled “Beyond the Space Odyssey”, Schwartz said that “capacity has become more manageable”, in other words, Equinix are now very much in control of their capacity pipeline these days so much so they are much more focussed on other areas, such as creating the right “eco-system” of clients in their facilities, ie, the focus has moved beyond providing space alone.

New Entrants are also bringing on new supply

It is also worth mentioning the new entrants who are also now adding capacity to the market, such as Blue Square in Milton Keynes or OptionsIT in Park Royal and many others listed on our website.  Whilst the majority of these sites, most of which are located around London, are quite small in their own right, in total they add up to quite a decent amount of space, as the table below illustrates and its worth pointing out this is a very conservative list. 

Besides aiding the overall supply picture we believe the new entrants are offering significant choice to the large pan-European operators in terms of new locations, service and significantly, pricing.

But think in terms of power, not space!

Final point to bear in mind is that looking at floor space is a bit of an “old fashioned” measure of capacity, though no doubt still in common use within the industry.  For example, in our 1.58m sq ft of space in London we are including space designed to run at under 1kW per square meter compared with these newer facilities that are designed to 1.5 or even as much as 2kW per square metre.  In other words, the new space is worth twice as much as the old space, at least in power terms.  Again, this emphasises our preference these days to think in terms of kilowatts rather than square feet or racks as these measures are pretty meaningless until you know how much power is included, either per rack or per square foot.

Tim Anker

April 2010