The data center industry continues its rapid growth in 2017 to meet the storage demands of existing robust cloud providers. At the same time, the vacancy rate of U.S. data center space is 4.6%, according to real estate brokerage firm CBRE. Even though tightness remains for server capacity, there is still much more data center development on the way.
Geography of Expansion
Most of the construction going on in 2017 for new data centers is in Northern Virginia, which is expected to add 121 MW of power. Other key places for larger data space include the Dallas-Fort Worth area and Silicon Valley in California. According to CBRE, about 271 MW of capacity is being built in big metropolitan areas, of which 160 MW is under construction without signed leases from vendors.
Will Expansion Pay off for Cloud Providers?
Data facility owners are expected to do well in 2017 in terms of a balance between supply and demand, according to real estate experts. It appears to be a positive move for modern data centers that can offer a multitude of cloud and managed services. As owners of traditional data centers move into outsourced data centers, the door will be opened for more vacant facilities to be sold.
In 2016, data center asset sales reached $1.78 billion with an average price per square foot of $275. Acquisitions that had not yet closed by the end of the year included Equinix’s purchase of Verizon data centers in the Americas and CenturyLink’s proposed acquisition of BC Partners and Medina Capital. Data facility owners with the greatest potential to capitalize on rising demand for network connectivity and pricing are those in heavily populated areas.
What Expansion Means for IT
The IT industry is challenged by tight budgets and limited space. That puts IT firms in a position to make one of three choices, according to CenturyLink:
- Construct a new facility
- Upgrade an existing data center
- Outsource with a trusted provider
The key factor in choosing what to do to meet growth challenges will be for IT companies and the businesses they serve to evaluate costs together. The increasing emphasis among businesses on big data and analytics is part of what’s fueling this steady expansion. Other reasons for this growth include:
- Demands to replace outdated technology
- The trend toward globalization
- Mergers and acquisitions, and spinoffs that require more space
- Increasing interest in more disaster recovery server space
MicroCorp has been supporting MSPs, VARs, and agent partners for over 30 years. If you’ve run out of server space or need a more efficient data center solution, contact us to learn how we can accommodate your technology needs.