Interesting to read about Tier1 research trying to soothe market concerns about data centre over supply, as reported by Data Center Knowledge http://bit.ly/r51A6Q today. Tier1, an American based specialist research house were extensively quoted in the Coresite prospectus published in early 2010 saying that data centre demand was set to outstrip supply by 250% and that occupancy would soar from 73% at end 2009 to 96% by 2013. (This link will take you to the Coresite prospectus: http://bit.ly/qDj0sI). Understandably Tier1 also forecast that data centre pricing “could be driven up significantly”. And this was only one of several authoritative research reports released last year predicting what can only be described as another data centre supply crisis, with both US based Telegeography headlining in their 2010 Colocation Database that “Colocation capacity struggles to keep up with demand” http://bit.ly/p0DmNF or even Europe’s own BroadGroup predicting strong demand growth in Europe: “Demand will remain strong and prices will rise” according to Broad Group’s Steve Wallage in a press release when launching the company’s 3rd bi-annual European Data Centre Market Report http://bit.ly/owkmPB. Yet in a keynote address at the Hosting and Cloud Transformation Summit yesterday, Antonio Piraino, Research Director at Tier1 specifically addressed one of the most oft questioned they were being asked: “is the data centre sector over supplied”? Once again Piraino reiterated the Tier1 view that despite admitted “large amounts of supply”, Tier1 “still see demand outstripping new supply.”
Colo-X view remains its a market in healthy balance!
So, it would appear no change in the analyst’s view then that the demand/supply outlook remains heavily in favour of the suppliers. However, at Colo-X we maintain our position that across the data centre market supply AND demand remain healthy and in reasonable balance. For example even in one of the tightest data centre markets in Europe, London Docklands, where occupancy has often been close to 100%, we have had significant amounts of new supply being made available over the past few years, primarily from the new Telehouse West building but with more to come from both Telehouse West and as Telecity release the first 3MW of welcome new capacity in their Harbour Exchange complex (and with a further 3MW of announced capacity behind this). There is also some new capacity in Docklands in a growing number of smaller facilities such as the new sites from Eurohub, QIComm and more recently from Cogent. Even our own commission figures for Docklands deals in 2011 are showing that once again (as with last year) Docklands is very much open for business these days. Elsewhere in the UK colocation market we continue to see significant new entrant build adding to the large announced capacity plans from the big premium operators and furthermore, we believe the amount of wholesale capacity being offered as retail capacity continues, either directly in the form of “wholo” from the wholesale operators themselves (eg Sentrum Colo Ltd at Hayes) or via resellers, such as Telstra’s recent success in the Sentrum Woking facility. All in all therefore its hard to see there being a supply crisis, despite reasonable overall occupancy levels, when so many new sources of supply continue to arrive.
New entrants now appearing in continental data centre markets as well
Its also important to be aware that new entrants are not just adding significant new data centre supply to the UK market, they are now (at last) featuring more in continental markets as well. For example in Amsterdam Evoswitch are set to become a significant local player (potential of 40,000 sq m on their existing site with 5000sq m already built-out) whilst other new entrants to the Dutch market such as Switch Datacenters are also emerging (5MW site in phase 1) and unlike the London market, where Docklands has such unique characteristics, these new entrants into the Dutch market are able to demonstrate both similar quality AND connectivity choices as their older established rivals. The increasing variety of sources of data centre supply are becoming a big challenge for buyers, as indeed for Colo-X, in keeping up to date with the latest availability and indeed commercial considerations.
Of course we believe that the more complicated this market gets the more value we can add as the industry’s leading independent specialist agents. Let me know how we can help you.
Tim Anker September 2011
- Its all a matter of perspectives: colocation oversupply or surging demand?!
- Telehouse secure land to expand Docklands campus
- UK Wholesale data centre market opens opportunities for colocation users
- CBRE Q2 European Data Centre Viewpoint – including guest column by Colo-X on colocation pricing in the UK
- Dublin’s Web Summit October 2011