Crunch Time: The Credit Crunch & Data Centers
March 3rd, 2008 By: Rich Miller
Data centers are filled with servers and storage, and the demand for the facilities is driven by trends in information technology. But they are also real estate, and the supply of data centers is governed by the ability to finance these capital-intensive building projects. Many observers of the data center industry are closely watching corporate IT spending as an indicator of future demand. But conditions in the commercial real estate markets are emerging as a major influence in the future supply of data centers. For the remainder of 2008, the credit crunch is likely to be a major player in the data center market.
Today we begin a five-day series of stories looking at supply and demand in the data center market, and how it may be affected by the credit crunch and economic slowdown. Here’s an overview of our “Crunch Time” series:
- Today: A look at the eroding conditions in the credit markets and commercial real estate, and what this means for data center projects that are in the planning stage.
- Tuesday: What will the credit crunch mean for the data center builders, the specialized companies that have already committed to spending hundreds of millions of dollars on new facilities?
- Wednesday: Wall Street’s appetite for premier data center space has been a boon to the industry. Will the financial sector, bruised by huge losses from subprime lending, continue to build new facilities?
- Thursday: Analysts say belt-tightening in corporate America will squeeze IT budgets hard. With IT budgets shrinking, can the booming demand for data centers continue?
- Does video change everything? How might common assumptions about supply and demand for data center services be altered by the emergence of online video.
The last couple of recession periods have marked big increases in spending on used IT hardware. Whether or not this is a recession, we’re banking on increased interest in discount refurbished big-iron datacenter equipment here. The pitch of “we can save you 30-90% off list price” is a lot easier to make when IT managers are trying to figure out how to stretch their budgets to meet demand.
I’m sure some buyers will reach out to eBay, but those that need a trusted seller as well as technically experienced engineers and sales reps, will go to the more professional refurb resellers like us.
I’m looking forward to reading the series.