Its all a matter of perspective!
Call me “Mr Sceptical”, but funny how headlines can be used to give certain impressions!
Data centre agent CBRE’s ever detailed quarterly review was out last week (click here to download) and the headlines screamed: “Cloud drives European data centre demand as colocation take up rises 12%” – “woo hoo” we all shout (or are meant to)! Yet lower down in the report we also see that 2012 was a record year for supply growth, with an annual increase of no less than 106MW – is this not the bigger story??!
To be fair, the point worth shouting about regarding “take up” or demand is that 2012 colocation demand of just under 45,000 sq m is the first year of positive growth in this figure since 2008 (when demand was just over 70,000 sq m according to CBRE), so 2012 puts an end to three years of declining demand.
Regarding colocation supply, the agents estimate that at year end 2012 there was just under 100,000 sq m (128MW) of colocation capacity available across the “Tier1 European markets”, equivalent to two year’s worth of demand at last year’s levels. Furthermore, CBRE estimate that there is a further 26,000 sq m (44MW) of new supply to come on stream in 2013 – so in other words, the idea of any capacity crises affecting the industry is looking highly unlikely and nice to see the agents finally confirming as such.
The other point worth mentioning is that I reckon the 26,000 sq m estimate for new supply in 2013 is a conservative figure. I believe CBRE will only be including “definite” schemes – a sensible enough approach for sure, but it won’t be taking into account the huge potential of wholo – ie wholesale data centre capacity being offered as colocation, nor do I believe it will include many of the new start ups who are still continuing to see the data centre industry as an attractive area to invest in. Even in one of the tightest markets in Europe, the central London data centre market, we have seen Telehouse’s recent announcement regarding their land purchase (click here for our comment on this) and not far away on the Olympic Park in Stratford is the huge Infinity scheme using the former Media Centre – a building of 300,000 sq ft gross, probably able to offer some 140,000 sq ft of net tech – both schemes likely to add to the 2014 supply picture as opposed to this year, but still making the point about the medium term supply visibility we now have in the colocation industry.
All in all then, an encouraging backdrop for colocation buyers, though site selection of course now becoming more challenging as the range of options continues to widen. As ever, at Colo-X we continue to do our best to visit as many of the new sites/operators as possible, so allowing the most up to date perspectives and of course, our regular stream of colocation deals means we are always up to date on colocation pricing across the spectrum.