Equinix, Inc. (EQIX) will pay $49 million to acquire a building in El Segundo to expands its data center network in the Los Angeles market. The company will also invest $41 million to expand its existing Santa Clara data center, saying the "demand for data center and network exchange services continues to accelerate, far outpacing supply."
The Los Angeles expansion is driven by the rapid growth of online video and gaming. The new center will be Equinix's fourth data center in the Los Angeles area, and has a capacity of 3,000 cabinets, with a first phase scheduled create technical space for up to 1,700 cabinets. Equinix said it is scheduled to close on the purchase of the property by the end of June, and the center is expected to be open for customers in the fourth quarter of 2008. In addition to purchasing the land and existing building shell, Equinix plans to acquire access to power and provision fiber for interconnection to Equinix's other three IBX centers in the region.
Equinix also will expand its existing data center in Santa Clara, Calif. by approximately 1,100 new cabinets. The company already houses 90 networks and 125 enterprise and content companies in its four Silicon Valley Internet Business Exchange (IBX) centers. Equinix said it hopes to open the expansion space in the second quarter of 2008.
"Video and multimedia applications continue to be a catalyst for accelerated demand from our content and digital media customers in our West Coast markets," said Steve Smith, CEO of Equinix. "Today's expansions in the Los Angeles and Silicon Valley markets represent Equinix's commitment to maintaining our leadership position in the growing data center and network exchange services market."
Equinix said the Silicon Valley expansion will generate $25 million to $30 million in annual revenue at full capacity. The company said it will update its full year capital expenditures guidance for the Los Angeles and Silicon Valley expansions on its second quarter earnings call.
Equinix is also in the midst of building huge projects in northern New Jersey, Chicago and northern Virgiania and recently announced that it will buy its San Jose, Calif. facility, a transaction driven at least in part by the desire to have land for additional greenfields expansion.