Business Week has an article about the data center boom and the looming shortage of quality data center space. BW examines central Washington, the site of future data centers for both Yahoo and Microsoft, as a case study in how data center development can boost local economies. The article also looks at the big picture supply and demand outlook.
If more server farms aren't built - and a state-of-the-art data center can cost up to $1,000 a square foot, five times the cost of conventional office space - the squeeze might even crimp the ability of Net up-and-comers to bring new innovations to market. "I'm not seeing what I need to see" in terms of new capacity coming online, says Jay Adelson, the CEO of social networking Web site Digg.com, who also started Equinix Inc. (EQIX ), a Foster City (Calif.) company that operates centers. Digg.com secured space in Equinix facilities, but Adelson asks: "There are hundreds of me out there, and where are we all going to go? There isn't [enough] data center space."
The impending supply vs. demand imbalance "amounts to a gold rush for the companies supplying land, equipment, and services for data centers," Business Week notes.
In addition to soaring share prices for companies like Equinix, the article also looks at the potential impact on pricing as space shortages emerge in key markets: "In the past year owners of commercial hosting centers have been able to increase their prices by 20% or more, say some data center operators. Gartner Group Inc. (IT ) expects prices to rise as much as 70% in the next year."
We've learned to be cautious about "hockey stick" charts projecting future growth. But the Business Week article will likely mean more attention - and perhaps more investment - for the data center sector.