Interesting to see Newport (Wales) based Next Generation Data announce a second “colocation” hall yesterday (http://bit.ly/S1nkvE ).
NGD have just released another hall to accommodate some 138 cabinets, so about 4000 sq ft in total and apparently they’ve already sold some 60-70 cabinets in their first hall dedicated to individual rack sales. Rather than selling directly NGD are adopting a channel approach, with a volume based discount scheme for approved resellers, a pattern that exactly fits the model we suggested in our wholesale data centre review earlier this year (http://bit.ly/waCAHi) . It must also be some relief to the local Welsh colocation market that retail customers can now access this high quality data centre facility on a rack by rack basis instead of the original model requiring commitments of 10,000 sq ft or above – in a way everyone’s a winner, especially the local Welsh IT services market.
This move is typical of what we’re seeing in the data centre market, a trend we’ve highlighted for some time now, of the wholesale operators re-packaging their product to look pretty much like a standard colocation offering. This is happening because the large scale debt financed deals that the wholesale models were originally built around are few and far between these days and crucially they CAN build out in these small chunks because they’ve now got the shareholders funds to do so. So expect to see more of this from the wholesale sector and another meaningful supply of high quality colocation space – yet again emphasising why we refuse to subscribe to the theories that the colocation market is capacity constrained in any way at present.
I was also a bit surprised to hear 9 halls had been built out in NGD, though it seems some of the latest halls are a bit smaller than the original 10,000 sq ft modules the site plan was originally based upon. According to today’s press release BT now have two large halls and Logica, the other original tenant, have also now grown beyond their initial hall, so in total just under 40,000 sq ft is now fitted out. In a site that can offer some 300,000 sq ft of net tech though there’s still loads of potential capacity here, which of course means there’s a stack of potential colocation supply and this is the same with many of the other wholesale sites and operators in the UK data centre market – they all tend to be big sites and they are all now offering or looking at offering some form of retail colocation product. In aggregate therefore this lot adds up to a meaningful alternative supply pipeline of high quality colocation space.
To discuss the NGD colocation proposition or any other aspect of this article please don’t hesitate to contact us.