US Data Center Market

Data center services market in United States is estimated to have reached US$28.2 billion by the end of 2009. The market continued to grow at a CAGR of 25% since 2000 and Over the next four years, data center services market in United States is expected to grow at a CAGR of 12.36% to reach US$45 billion, primarily due to the rising internet traffic with greater bandwidth penetration, growth in social media and web 2.0 and the overall maturity of the online business models. Complex managed services will continue to have almost half of the market share, however, shared services are expected to grow fastest in terms of CAGR (14.2%) followed by basic dedicated (12.7%), complex managed (11.9%) and colocation (11.8%). Source: Synergyst’s “Data Center Services Market in US.

U.S. data center market will continue to grow in the latter half of the year as demand shows no signs of slowing. Due to the thawing capital markets, providers and users of data center space are now able to make decisions, releasing years of pent-up demand and resulting in higher deal volume, according to Jones Lang LaSalle’s mid-2011 U.S. Data Center overview. US data center market is expected to see significant growth in 2011 and 2012 according to a study recently completed by Digital Realty Trust. Each year they survey over 300 executives at large US companies about their business and data center needs and found that 2/3 of the respondents had added data center capacity in the last 12 to 24 months and amazing 85% report that will definitely/probably will expand their data center capacity in 2011.

From 2010 to 2015, the U.S. green data center market is projected to increase from $3.82 billion to $13.81 billion, according to the latest issue of EL Insights. This represents a compound annual growth rate (CAGR) of 29% during this time period. U.S. Government expenditures on green data centers will reach $0.86 billion in 2010 and increase to $2.05 billion in 2015, accounting for 14.9% of the green data center market in the U.S. The U.S. market for data center construction, currently about $15 billion a year, will likely grow to about $18 billion by 2020. At current economics, annual data center construction spending would soar to $50 billion a year in the U.S according to Microsoft.

US Government is under pressure to reverse a decade-long building spree that has seen the number of U.S. data centers grow from 432 to 1,100. Data centers include everything from backup power supplies and redundant data communications connections to environmental controls, such as air conditioning and fire suppression, and high-end security devices. All of that equipment costs money and gobbles up precious energy resources. The White House Office of Management and Budget recently announced that it would be shutting down 373 U.S. government data centers by 2012. Over the last two years, the number of U.S. data centers has quadrupled, and yet they are running at only about 27 percent utilization, according to the Office of Management and Budget. Administration has shut down 81 of these data centers already in 2010, and has a goal of shutting down another 195 during 2011, and 97 more by the end of 2012 for a total of 373. Beyond 2012, its overall goal will be to shut down 800 data centers by the end of 2015.

US Datacenters Regional Outlook- Jones Lang LaSalle’s U.S. data center market

Chicago: Pent-up demand already exists with approximately 35 MW remaining in the Chicago area, even though more than 10 MW of users secured data center or colocation space in 2010. The area has experienced strong growth with over 40 MW of new wholesale/ colocation and powered shell in downtown Chicago, and more than 20 MW in the suburbs.

Dallas/Ft. Worth: Demand is projected to grow at an average rate of 13% through 2014, tightening an already constrained market. Rental rates softened in the early part of this year as landlords competed for tenants prior to the opening of new data center facilities. Demand will continue to outpace supply until a wave of new construction is completed in mid-2012.

Los Angeles: Colocation companies are continuing to expand in the downtown area, to keep up with strong demand from entertainment, financial and other professional services industries. Rental rates for colocation space have stabilized and now range between $150 to $200 per kW on a triple net comparable basis, although rates will likely increase in buildings that are sold, as will energy costs from most of the area’s utilities.

New York/New Jersey: Leasing at colocation facilities continues to be strong as companies look to partner and preserve cash flow. Rental rates softened last year in part because of increased supply with providers like DuPont Fabros Technology and I/O opening new facilities. The financial service industry continues to be the area’s biggest user, followed by pharmaceutical, media and telecom companies.

North Carolina: The state continues to see strong interest from enterprise users, lured by reliable low-cost power from two respected utilities and strong incentive packages. Demand for enterprise space continues to expand and powered shells are now hitting the market geared specifically to the data center user. Colocation space will remain at a premium until new facilities are completed.
Pacific Northwest: Demand has increased as users look to take advantage of the region’s climate and use of outside air economization to increase efficiency and reduce costs. There remains a limited supply of data center product, though new speculative projects are in the works. Interest in data center acquisitions is strong, as are colocation expansions with more than 200,000 square feet of space coming online last year.
Phoenix: Demand continues to exceed supply in the Phoenix market, with tenants in tight competition for quality space. This year approximately 20 MW of critical IT load and 170,000-square-feet of raised floor will be delivered. Cost of power remains steady at approximately $0.069/kWh, while market rents range from $145 to $175 kWh on a gross basis.
Silicon Valley: The area’s data center market is extremely healthy with a vacancy rate of below 5%. An estimated 20 MW has come online this year, with the market already absorbing half the space, a sign of how strong demand remains. Constraints on power availability will be the only governor of increase speculative builds.
Virginia: Supply is increasing and rents are softening in this top US data center market, where the vacancy rate stood at 8.25% as of August. In the past decade, more than 4.2 million square feet of data center space has been delivered in the northern part of the state. Look for continued speculative developments from data center providers.

Major Players in US Datacenter MarketEquinix, Inc. (EQIX) is a global provider of network-neutral data centers and Internet exchange services for enterprises, content companies, systems integrators, and network service providers. The company was incorporated on June 22, 1998, and has U.S. headquarters in Foster City, California. Equinix operates in 38 strategic markets across the Americas, EMEA and Asia-Pacific and continually invests in expanding its platform to power customer growth.

Website: http://www.equinix.com/

Savvis, a CenturyLink company, is a global leader in cloud infrastructure and hosted IT solutions for enterprises. Nearly 2,500 unique clients, including more than 30 of the top 100 companies in the Fortune 500, use Savvis to reduce capital expense, improve service levels and harness the latest advances in cloud computing. CenturyLink is the third largest telecommunications company in the United States. The company provides broadband, voice, wireless and managed services to consumers and businesses across the country.

Website: www.savvis.com or www.centurylink.com.

Digital Realty Trust, Inc. focuses on delivering customer driven data center solutions by providing secure, reliable and cost effective facilities that meet each customer's unique data center needs. Digital Realty's customers include domestic and international companies across multiple industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services. Digital Realty's 98 properties, excluding three properties held as investments in unconsolidated joint ventures, comprise approximately 17.4 million square feet as of October 27, 2011, including 2.1 million square feet of space held for redevelopment. Digital Realty's portfolio is located in 30 markets throughout Europe, North America, Singapore and Australia.

Website: http://www.digitalrealtytrust.com/Default.aspx

AboveNet, Inc. provides high bandwidth connectivity solutions for business and carriers. Its private optical network delivers key network and IP services in and among top U.S. and European markets. AboveNet's network is widely used in demanding markets such as financial services, media, health care, retail and government. . The company was formerly known as Metromedia Fiber Network, Inc. and changed its name to AboveNet, Inc. in August 2003. AboveNet, Inc. was founded in 1993 and is based in White Plains, New York.

Website: http://www.above.net/

DuPont Fabros Technology, Inc. (NYSE: DFT) is a real estate investment trust (REIT) and leading owner, developer, operator and manager of wholesale data centers. The Company's data centers are highly specialized, secure, network neutral facilities used primarily by national and international Internet and enterprise companies to house, power and cool the computer servers that support many of their most critical business processes. As of March 31, 2011, the company owned and operated six data centers in Northern Virginia; one data center in suburban Chicago, Illinois; and one data center in Piscataway, New Jersey.DuPont Fabros Technology, Inc. is headquartered in Washington, DC.

Website: www.dft.com.

Level 3 Communications, Inc. engages in the communications business in North America and Europe. It offers network and Internet services, including transport services, high speed Internet protocol services, dedicated Internet access, virtual private network services, and dark fiber services, as well as managed modem, an outsourced, turn-key infrastructure solution; and colocation services. As of December 31, 2010, its network encompassed approximately 68,000 intercity route miles in North America and an intercity network covering approximately 13,000 miles across Europe. Further, it sells coal primarily through long-term contracts with public utilities. The company was founded in 1884 and is headquartered in Broomfield, Colorado.

Website: http://www.level3.com/en/

Verizon Data Centers - With more than 200 data centers in 23 countries, Verizon can provide you with a secure, flexible, carrier-grade environment to colocate your Internet servers, data networking or voice equipment with direct access to one of the world’s fastest and most scalable IP networks. Verizon Data Center Colocation services deliver the connectivity and dedicated infrastructure with a high degree of control over the application itself, without the worry of the physical infrastructure or other non-core business issues.

Website: http://www.verizonbusiness.com/Products/it/data-center/datacenter-colo/

SunGard Availability Services provides disaster recovery services, managed IT services, information availability consulting services and business continuity management software to over 9,000 customers globally. With approximately five million square feet of datacenter and operations space, SunGard Availability Services helps customers improve the resilience of their mission critical systems by designing, implementing and managing cost-effective solutions using people, process and technology to address enterprise IT availability needs.

Website: http://www.sungardas.com/Pages/default.aspx

C7 Data Centers is a privately held Utah company focused on providing high-value colocation, cloud, dedicated server and disaster recovery solutions to local, national and international businesses. Companies select Utah for colocation and business continuance because of its disaster free record, low operational costs, and easily accessible location in the United States. C7 is committed to research in the areas of cooling efficiencies, product solutions and leading edge data center technologies.

Website: http://www.c7dc.com/

Cogent Communications (NASDAQ: CCOI) is a multinational, Tier 1 facilities-based ISP, consistently ranked as one of the top five networks in the world. Cogent specializes in providing businesses with high speed Internet access and point-to-point transport services. Cogent's facilities-based, all-optical IP network backbone provides IP services in over 170 markets located in North America and Europe.

Website: http://www.cogentco.com/

IO designs, engineers and delivers data center infrastructure for the world's largest enterprises, governments and service providers. IO owns and operates data centers for hundreds of customers, and leveraged this experience to build a next-generation Data Center 2.0 technology platform. IO Anywhere modular data centers provide enterprise-class infrastructure that can be delivered as Data Center as a Service and rapidly deployed as a product to customer sites anywhere in the world. IO developed the first data center infrastructure operating system, IO OS, to provide the intelligent control needed to maximize utilization, resiliency and energy efficiency. IO is a privately held company headquartered in Phoenix, Ariz.

Website: http://www.iodatacenters.com/

NaviSite, Inc., a Time Warner Cable Company, is a leading worldwide provider of enterprise-class, cloud-enabled hosting, managed applications and services. NaviSite provides a full suite of reliable and scalable managed services, including Application Services, industry-leading Enterprise Hosting, and Managed Cloud Services for organizations looking to outsource IT infrastructures and lower their capital and operational costs. Enterprise customers depend on NaviSite for customized solutions, delivered through a global footprint of state-of-the-art data centers.

Website: www.navisite.com.

Peak 10 is a managed services and cloud provider with world-class data centers. It delivers scalable, economical and reliable solutions for hosting and managing complex information technology infrastructure. Peak 10 delivers exceptional results with flexibility, responsiveness and accountability. The company’s dedicated team embraces the industry's evolving technologies by adopting and tailoring solutions for cloud and virtualization technologies as part of its robust managed services offering. Its corporate integrity, financial stability, geographic diversity and technical expertise attract market-leading companies such as LendingTree, Global Knowledge, Pergo, Healthways, Churchill Downs and Carnival Cruise Lines. Peak 10 is SSAE 16 audited and helps companies meet the requirements of various regulatory compliance acts such as Sarbanes-Oxley (SOX), HIPAA/HITECH, PCI DSS and Gramm-Leach-Bliley (GLBA).

website: www.peak10.com.

Rackspace Hosting is the service leader in cloud computing, and a founder of OpenStack, an open source cloud platform. The San Antonio-based company provides Fanatical Support® to its customers, across a portfolio of IT services, including Managed Hosting and Cloud Computing. Rackspace has been recognized by Bloomberg BusinessWeek as a Top 100 Performing Technology Company and was featured on Fortune’s list of 100 Best Companies to Work For. The company was also positioned in the Leaders Quadrant by Gartner Inc. in the “2010 Magic Quadrant for Cloud Infrastructure as a Service and Web Hosting.”

Website: http://www.rackspace.com/

American Internet Services (AIS) is an enterprise-class data center and connectivity services company, with premium data center footprints in Los Angeles, San Diego and Phoenix. AIS provides unsurpassed security and award-winning redundancy for both primary and disaster recovery (DR/BCP) colocation setups, cost-effective transit and transport connectivity solutions over fiber, copper and wireless, as well as managed services such as geographic load balancing, Internet firewall security and remote data storage. Privately held, AIS is backed by Seaport Capital, Viridian Investments, and DuPont Capital Management.

Website: www.americanis.net