Data Center Demand Outpacing Supply

Worldwide demand for multi-tenant Internet data center space has grown 12.5 percent in the past year, while the inventory of available space has increased by 4.2 percent, according to new data from Tier1 Research. This strengthening demand growth trend contributes to "an already lopsided supply/demand curve," which is working to the benefit of data center operators, according to Tier1.

"The shared tenant datacenter market is red hot," said Daniel Golding, Vice President and Senior Analyst at T1R. "North America, for example, is seeing continued and strong datacenter demand, particularly in hot markets such as Silicon Valley, Northern Virginia (near Washington, DC), New York, Northern New Jersey, Dallas and Chicago. North American datacenter demand is up an incredible 14.67% in the last twelve months."

Data center demand drivers cited include growth in Internet content sites (including content delivery networks), the need for enterprises to maintain business continuity (largely driven by Hurricane Katrina and Sarbanes-Oxley) and power and cooling issues for many existing single-user data centers.

Data center supply in North America grew 6.49% in the past year, representing the first uptick of data center building and expansion since demand started to pick up during 2005, according to Tier 1. "While demand for outsourced datacenter space has been steady or increasing, datacenter construction has lagged behind. This trend - demand outpacing supply - is expected to continue through 2009," said Golding.

Tier1 Research, a division of The 451 Group, analyzes the IT, communications and Internet sectors.