Report: Wholesale Space is 81 Percent Occupied

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An example of wholesale data center space, in this case operated by CoreSite.

Occupancy rates for wholesale data center space stand at about 81 percent, down slightly from two years ago, according to a new report from veteran data center real estate specialist Jim Kerrigan. The slight reduction in occupancy is tied to an increase in the number of companies participating in the wholesale space, according to Kerrigan, Director of the Data Center Group at Avison Young.

“The U.S. wholesale data center market remains well supplied in 2012 with more product available today than at any time in the market’s short history,” Kerrigan writes. The market has expanded from five providers in late 2010 to 14 companies today, with more than 50 facilities that can immediately accommodate at least 1 megawatt of space. Thirty of those facilities are concentrated in three markets: California, Texas and Virginia.

There’s also been an increase in the number of facilities that can handle “super-wholesale” requirements exceeding 45,000 square feet of raised floor space and 6 megawatts of power. There are only a small number of customers with requirements on this scale, but their impact on a market and individual provider can be significant.

In the wholesale data center model, a tenant leases a dedicated, fully-built data center space. In colocation, a customer leases a smaller chunk of space within a data center, usually in a caged-off area or within a cabinet or rack. The wholesale data center model offers greater control and security than shared colocation space, but it’s not a fit for everyone. The economics of wholesale space have historically been most attractive to companies requiring at least 1 megawatt of power capacity for their data center.

The success of large publicly-held providers like Digital Realty (FLR), CoreSite Realty (COR) and DuPont Fabros Technology (DFT) have helped highlight the opportunity in the wholesale data center space, sparking investor interest and making it easier for new companies to finance projects.

Companies that prefer to build out their own data center space also have plenty of options. Kerrigan said there are 30 buildings in the U.S. being marketed as powered shells  - undeveloped space with the power and fiber connectivity already in place, allowing for easy expansion for companies with the capital to build out the infrastructure themselves.

For more details, see the full report.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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