In a presentation to investors at JMP Securities Research Conference in San Francisco, Digital Realty Trust outlined their perspectives of the current data center market and forecasts for the future.
Digital Realty CEO Mike Foust said that the company enjoys a 95 per cent occupancy rate across its property portfolio which covers the 25 top technology markets in North America and Europe. Faced by the challenges of cooling, security and building management systems, Foust said that the "high cost of occupancy creates a barrier of exit for tenants. In addition, he added that the high cost of entry "discourages speculative new supply and the build out of turnkey space, having quoted cost to build of US$500-1,000 p/ft┬▓and between $1,200-1,400 p/ft┬▓ for rentable space. When asked about the size of the market, Foust highlighted the drivers of e-commerce, securities trading and regulatory compliance as behind the demand for new buildings.
With statistics projecting that at least 50 per cent of corporate data centers will be obsolete in terms of cooling and power very shortly, and with server sales continuing to increase, Foust believes that there is a pent-up demand for new facilities, estimating that 4-5million ft┬▓ will be needed between now and 2011. With legacy data centers now obsolete following the dot.com bubble burst, there is now a need for new space as required by corporate customers. According to Foust, Digital Realty Trust is well placed to meet these requirements, with the company not subject to the obsolesce of electronic equipment due to its approach to facility infrastructure. All its properties have substantial amounts of power over and above what customer actually need and it can easily add additional power density when required.
The CEO identified that the company was experiencing a shift from beyond its traditional client base of technology tenants to corporate enterprises and energy companies such as BP. In key markets, Foust referenced a new facility it is building in outer London, details of which will be announced in the future, whilst building on its commercial activity in Paris, Frankfurt, Dublin and Amsterdam in Europe, and Northern New Jersey, Atlanta, LA, Seattle, Denver, North Virginia, Silicon Valley, Dallas, Chicago and Phoenix in the US.
As part of the ongoing global collaborative effort to reduce energy efficiency, the company has announced it has joined The Green Grid.