The data centre space race!
Over the last number of years, the data centre space industry has changed dramatically. Way back in 2001, when I first moved into this industry, data centres were are their lowest ebb. Facilities were shutting down, getting mothballed and generally the market was in poor shape. In Dublin, Ireland alone, more than half a dozen facilities were shut down, sold or taken over in the space of 12 months.
Now, things have changed, changed utterley. The hype and hysteria of the dot.com ‘boom’ has been replaced with the heady realism of the ‘late noughties’ and with it, the realisation of two fundamental truisms:
1 – more and more and more IT services are moving into the ‘cloud’ (I mean the internet cloud here, not the new cloud platforms)
2 – the cloud needs data centre space
At a global level, there is an excellent short summary on the data centre dynamics blog, some of the key points of which are:
“The last six months have seen continued expansion of datacenter space in Europe, with much of the growth coming from the established markets in the UK, France, the Netherlands and Germany. The degree of the increase can be seen from the effects of the Datacenter Price Tracker, where average carrier neutral space per rack has increased from 776 euro per month (July 2008) to 865 euro per month (January 2008), an average price increase of 11.5 per cent over the last six month period according to price tracker Tariff Consultancy.”
11.5% increase in 6 months is rather more than inflation, and over the last year or so, the increase has been even more dramatic.
So, are the data centres becoming money grabbing? Quite the opposite! Consumers have been used to articifically low pricing from the hosting world for a number of years now, few remember the prices charged for hosting 7 or 8 years ago (a lot more than today) which were possible because pretty much everything was cheaper. Staff, space, bandwidth, servers, infrastructure were all available at great rates after the ‘bomb’. That artificial situation, which was basically paid for by all the poor souls who funded ‘web 1.0′ has now run out, and providers are having to actually build and invest in their own facilities (as well as paying significantly more for utilities and staffing).
The current costs for data centre fit-out (assuming you already have the physical building) runs to around €1,000+ per square foot of data centre floor space, but, if anything, more and more space is currently being built.
While space at the moment in major markets (particularly London, Amsterdam, etc) is getting very tight, there is also a hugh amount of building underway. Locally, there are facilities either in build, plan or open in Cork, Shannon, Limerick as well as company’s like Data Electronics, Interxion and more planning expansion or new sites and even the incumbent, Eircom, opening a new 100,000 square foot facility in North Dublin. (This is outside the work underway from large corporates, such as Microsoft, who are building a 500,000 square foot facility in West Dublin).
More locally still, here in Hosting365 we’re building out another 8,000 square feet of facility space at our Park West Facility (altho as we don’t provide colocation in the general sense, our model is rather different).
The race is on, fueled by a lack of data centre space, higher returns on that space for developers and operators and the relentless drive of all services into the cloud !