Equinix Building New Data Centers in Silicon Valley, New York, Hong Kong

Equinix has added three more data center construction projects to an already extensive global capacity expansion push.

The three projects, expected to cost about $200 million, include a new Silicon Valley data center, a second-phase build-out on an existing site in New Jersey, and an expansion in Hong Kong, Equinix CEO, Stephen Smith, said on the company’s first-quarter earnings call Wednesday.

These projects are in addition to the four-continent expansion Equinix announced in March, which includes new data centers in Dallas, São Paulo, Tokyo, and Sydney. When completed, the four projects will add about 200,000 square feet of data center space total to the colocation giant’s portfolio, or enough capacity for about 4,000 server cabinets.

Equinix is also building in Amsterdam and expanding on existing sites in the Northern Virginia and Atlanta markets, as well as in Dublin, Frankfurt, and Warsaw.

“Given our high utilization rate of 80 percent and strong returns on development capital, we continue to expand in core markets, heavily weighted towards existing campuses and tier-one markets,” Smith said.

The new Silicon Valley data center will be built on the 11-acre plot of land in San Jose the company acquired last year. The property is adjacent to Equinix’s existing San Jose data center campus on Great Oaks Boulevard.

It was important to secure the land early because of the extremely tight real estate market in Silicon Valley, an Equinix representative told us at the time.

Demand for data center capacity in tier-one markets, such as Silicon Valley, is high, and the company is racing to add capacity in those markets to take advantage of it. Keith Taylor, Equinix CFO, said the provider’s low supply of available space in some markets made its management “feel a little bit more constrained today than we otherwise like to feel, and so we need to put the capital to work in those markets.”

Silicon Valley is one of those critical markets, and the management is “eager” to bring the new facility, SV10, online. “Left unchecked, it will put a constraint on our ability to grow,” Taylor said.

Equinix is building the second phase of its NY5 campus in Secaucus, New Jersey, since its first phase there – four buildings with capacity for more than 10,000 cabinets – is 85 percent full. Smith attributed a lot of the take-up in the first phase to last year’s relocation of all BATS Global Markets trading platforms to that campus.

“NY5 saw strong pull-through post the deployment of the BATS trading engine and is also seeing solid demand from the broader financial services community as they embrace hybrid cloud,” he said.

Related: Data Center Market Spotlight: New Jersey

Hong Kong is one of the fastest-growing data center markets in Asia Pacific, driven by cloud and digital content, Taylor said.

In Asia overall, Equinix is growing faster than in any other region, according to Smith. “We're growing the fastest in Asia, followed by Europe, followed by the Americas,” he said.

Equinix reported $844.2 million in revenue for the first quarter, a 31 percent increase year over year. A lot of the revenue boost is attributable to its recent acquisitions of Bit-isle in Japan and TelecityGroup in Europe.