Rich Miller
More than a third of large corporate data center users in North America plan to expand their footprint in 2010, and many are expanding because they have run out of power, not space. Those were the key findings in survey data released Wednesday by Digital Realty Trust. The survey of senior decision makers with responsibility for their companies’ data center strategies was conducted by Campos Research & Analysis for Digital Realty. Among the key findings: - 83 percent of respondents are planning data center expansions in the next 12 to 24 months;
- 36 percent of respondents have definite plans to make those expansions during 2010;
- 73 percent of respondents plan to add two or more facilities as part of their data center expansions;
It’s not surprising that Digital Realty believes demand will be high, since the company is in the business of building and leasing data centers. But the customer survey’s major points were echoed by multiple panelists at Wednesday’s New York event.
Financing is a Factor
“Demand has been pretty steady,” said Dan Golding, Managing Director at DH Capital, an investment bank specialized in hosting and telecom deals. “The story has really been supply. It’s been very, very difficult for people to finance new data centers.”
At the national level, the pending demand for data center space may be three times greater than the available supply of quality space, according to Jim Kerrigan, the director of the data center practice at the real estate firm Grubb & Ellis. “All those deals that got shelved in 2009 because the CFO said no .. they’re going to happen,” said Kerrigan.
The end users at DataCenterDynamics New York included large firms in the financial sector, who concurred with the notion that cost-cutting has resulted in pent-up demand for data center space. “A year and a half ago we were talking about new data centers,” said Glenn Neville, Director of Engineering at Deutsche Bank. “Since then we’ve been talking about how long we can go with our current data centers. Our plans for growth are still there. Those plans are being postponed, but they’re not being cancelled.”
“It feels like someone closed a door, and things are backing up behind it,” said David Schirmacher, a vice president at Goldman Sachs.
Big Chunks of Space Grow Scarce
Kerrigan said the supply and demand challenges will be most acute for companies needing large footprints of contiguous space. That imbalance stands in stark relief to the requirements described in the Digital Realty survey, in which 70 percent of companies planning data center expansions say they envision large projects of at least 15,000 square feet in size or 2 megwatts or more of power.
“One of the most interesting pieces of data in this study is the lead role that power is now playing in these expansions,” said Chris Crosby, Senior Vice President of Corporate Development for Digital Realty Trust. “The need for additional power has become the main driver for data center expansion plans as companies seek facilities with adequate power and favorable utility rates to control operating costs.”
As a result, more companies are tracking their data center power usage and using the data in their capacity planning. The survey found that 76 percent of respondents now meter their power use, while the number of companies that meter power down to the PDU level increased by 29 percent over last year. “These are very positive signs that companies better understand their data centers’ energy use and can make informed decisions to reduce energy consumption,” said Crosby.
| Digital Realty Trust: Data Centers to Expand in 2010, 2011 Written by Jeffrey Clark | |
| Tuesday, 09 March 2010 | |
| A 2010 survey conducted by Campos Research & Analysis on behalf of Digital Realty Trust indicates that a significant portion of large North American companies are planning to expand their data center infrastructure in 2010 and 2011. This survey, conducted in mid-January, queried high-level company employees (executives or upper-level managers in information technology or finance) from 300 large companies. The participant companies were required to have a minimum of 5,000 employees or a minimum annual revenue of a billion dollars, and the individual respondents were required to be in charge of managing some aspect of the company’s data centers, whether operation, expansion, or implementation. The companies represented in the survey consist of a fairly wide cross section of industry, with slightly over a quarter dedicated to IT, the Internet, or telecommunications. About 15% of the companies were in finance, with the remainder in the “other” category. According to the survey, the companies average about four data centers each, with nearly 20% operating six or more data centers. Of the companies represented in the survey, 22% built or acquired a new data center in the 12 months preceding the survey, and 63% did so between one and three years prior to the survey. With ever-increasing demand for data services despite the recent economic downturn and with most companies having built or acquired additional data center facilities over a year prior to the survey, a significant increase in data center facilities in 2010 and 2011 seems to make sense, especially as companies hope for continued economic recovery. For 2010, 36% of responding companies indicated that they were “definitely” planning data center expansions; 46% responded that they would “probably” expand their data centers, leaving only 18% that were unlikely to initiate an expansion this year. The numbers for planned data center expansions in 2011 were virtually identical, with a total of 84% either “probably” or “definitely” planning an expansion. Most of the companies (63%) with definite plans to expand have only one or two locations slated for expansion; 14% indicated plans to expand four or more data center locations. The survey also indicated that data center budgets are on the increase, with 75% of the respondents expecting some increase; 35% expect an increase of less than 10%, and 30% expect an increase between 10% and 20%. According to the survey report, the average budget increase for 2010 is forecast at 8.3%—a change of +1.7% over the 2009 budget increase. IT budgets followed a similar trend, with an average expected increase of 8.1% and with about 73% expecting some level of budget growth. On average, the survey report indicated that 35% of represented companies’ IT budgets are dedicated to data center operations and development. At the top of the list of preferred locations for new or expanded data centers are several American metro areas, led by New York City, which is closely followed by Chicago, Los Angeles, and Dallas. Foreign locations that ranked high on the survey’s list included London, Singapore, Paris, and Tokyo. The survey also inquired about the respondents’ reasoning for their expected data center expansion in 2010; those that indicated on the survey definite plans for expansion rated the relative importance of various reasons for this expansion. The leading reason was power capacity, with 74% of the respondents indicating that this reason was “extremely important.” Next was disaster recovery and Sarbanes-Oxley (compliance, presumably) at 72%, followed by security at 69% responding with “extremely important.” Other possible reasons cited in the survey include energy efficiency, consolidation, cooling, redundancy, potential regulations, environmental concerns, and need for additional space. A potential indicator of the scope of the expected 2010 data center expansions is the expected change in power usage. According to the survey report, the average expected power usage increase among companies that have definite plans for expansion is 12.8%, with 40% planning between a 10% and 20% increase. For all companies included in the survey, the average expected power usage increase is 8.3%. Overall, the survey commissioned by Digital Realty Trust indicates no slackening in large companies’ increasing need for data center services. The expected expansions over the next two years are likely predicated on whether the economy begins to recover or whether the United States (and, to a lesser extent, the rest of the world) is in for a so-called double-dip recession. |
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