Switch & Data: $125M Expansion in 2008

Switch and Data (SDXC) will spend $125 million to expand its data center footprint in 2008, the company told analysts Tuesday. The investment will expand the company's colocation capacity by 2,600 cabinets, including 1,300 new cabinets in its new data center in North Bergen, New Jersey, and another 1,300 cabinets in expansion space in Sunnyvale, Calif., Toronto and Dallas.

"Customer demand is strong, and we are accelerating our investment in the future," said Switch and Data CEO Keith Olsen, who was particularly keen on the prospects for the New Jersey data center. "We are really excited about this new site. This year we have been experiencing 40 percent growth year-over-year in the New York metro area."

Switch & Data said the new space in the four expansion sites will be engineered to deliver power density exceeding 200 watts per square foot, citing the need to support demanding requirements of enterprises and Web 2.0 companies.

"Power density is the number one issue cited by enterprises and Internet content providers when selecting new data center space," said Dan Golding, Vice President and Research Director at industry analyst firm Tier1Research. "Continued Internet growth of nearly 100% annually, combined with power hungry servers will overwhelm any gains we might see through enhanced energy efficiency or increasing levels of virtualization and are driving data center users to demand power levels in excess of 200 watts per square foot for any new deployments."

Switch and Data's 34 data centers had a capacity of 9,500 cabinets at the end of the third quarter, of which 6,636 were filled and billable, an increase of 20 percent from 5,526 in the year-earlier period. In addition to the 2,600 cabinets added in the 2008 expansion, the company said it also expects to add another 1,700 cabinets in 2009 as it completes its New Jersey site. That would give Switch and Data network-wide capacity of 13,800 cabinets by the close of 2009.