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DatacenterDynamics' first annual conference in Atlanta attracted more than 300 attendees
As more companies are acknowledging capital efficiencies that can be achieved by using colocation data center services instead of building out their own data centers and as more investment gets poured into the colocation provider market, extreme growth is to be expected in the future in the size of the market, according to Ken Baudry of Grubb and Ellis.
Baudry, who works with G&B’s Data Center Group, said that only five percent of all data center space in the US was provided by colocation data centers currently. The combination of growth in demand and a shortage of adequate space to satisfy that demand will keep colocation prices in check and space build-out rising.
“If that’s really true, we’re about to see colocation market take off like never before,” Baudry said on Friday during a presentation at DatacenterDynamics’ first annual conference in Atlanta, Ga. “You’re going to see a quickening pace of development. You’ll see traditional developers (office and other commercial space besides data centers) jump in the market.”
And Baudry does not foresee a shortage of capital to support the expected growth.
“There’s a lot of money pouring into data center space. Not your traditional debt financing, but equity. It’s pouring in because there’s no other place to put it. There’s no (other) market segment in real estate to put equity in.”
As the market grows, companies that are considering using colocation services have to do a lot of homework, however, because colocation does not work for everyone. In many cases, the capital cost of migrating IT equipment and the cost of power a colocation provider charges may not make sense financially.
Most colocation providers today are “selling space based on dollars per kW, based on committed capacity.” The power sold comes with a defined square footage. In some cases, a client may end up paying for more power than they really need because they need a larger physical footprint to accommodate their equipment.
Customers that face such possibility many need additional investment to refresh their technology to increase density per square foot, or “changing how you rack and stack equipment.
“If you can match your power per square foot to the specs of the facility, colocation is a great deal for you,” Baudry said. “If you’re not willing to change your computing model, colocation won’t work for you.”
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Keywords: Grubb & Ellis, colocation, US colocation market, data center,enterprise data center, data center demand, data center supply, Atlanta data center | | 
