Bergen Record Examines NJ Data Center Market
February 11th, 2013 By: Rich Miller
Readers tracking the data center market in New Jersey will be interested in a story in Sunday’s Bergen Record that reviews the surge in activity in data center construction in northern NJ, including new projects by Internap, CoreSite and Telx (they seem to have missed a recent project in Totowa from Digital Realty).
“Some real estate executives say this burst of activity will add inventory to a data center market that, while poised to grow dramatically the next five to 10 years, is already overbuilt,” the paper reports. “In its third-quarter data center report, Cushman & Wakefield pegged the vacancy rate for North Jersey data center space at about 20 percent. … Third-party data center providers, in contrast, maintain that in the wake of superstorm Sandy and bolstered by the improving economy, there is already enough demand to justify their investment in additional facilities. And many of these providers estimated that the data center vacancy rate is far below 20 percent.”
The story picks up on some – but not all – of the complexity of the New Jersey market, where demand for data center space is segmented between single-tenant facilities, “wholesale” data center space and retail colocation providers. The demand outlook also varies between the northern counties adjacent to New York City and the growing cluster of wholesale providers setting up shop in central New Jersey.
Seems a story like this surfaces every year, as yet another group of data centers sprout into the market, or a wholesale giant decides to buy and retrofit. The debate of where the surplus is – supply or demand – is again refueled. I see data center market to be rather steady, growing with the demand from high power computing, mega storage, and new mobile technologies, until jostled by radical events like 9/11 or hurricane Sandy… I suppose that the market really isn’t all that “steady” then.
It is worth noting that many of the article focus solely on data center floorspace. I believe it may be more compelling to focus on the types of data centers that are available in NJ and where the customers are more attracted. With so much data center space in NJ, it will be interesting to see where the trend goes; luxury 2.0-like data centers, extreme high density data centers, POD/container data centers, free Xconnection facilities, or existing data centers upgraded with cooling steroids. Telx boasts their new data center is to be the 4 Seasons of data centers. NetAccess is “far” into north western NJ, yet cutting edge with “reverse raised floor” hot aisle containment via proprietary racks with chimneys. Dupont Fabros has a mega data center with aggressive wholesale pricing. IO has high density module containers which are slowly becoming more and more accepted in the community as big players like Microsoft, Hewlett Packard, and Goldman Sachs builders go modular.
Nonetheless, the next coming years are going to be very interesting in the data center world as we sit in the epicenter of the country’s most competitive market for data center services.