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Good Data Center Space Getting Hard to Find

by on April 30, 2010

Real estate in cyberspace may be infinite, but in metaspace it’s not, as one data center builder is finding out.

Equinix, a data center operator based in Foster City, Calif., said at an earnings conference call this month that it was running short on space for its facilities in three of its key U.S. markets. The company expects the situation to be a temporary one because later this year it will be opening centers in northern New Jersey, Virginia and Silicon Valley. Acquisitions in the pipeline and subject to regulatory review could also relieve the space crunch.

Equinix has been operating at 80 percent capacity since 2008. Of the remaining 20 percent, about half are reserved for deals in the late stages of completion. “Depending on our win rate from these, we could face some temporary capacity constraints in the middle of the year in three of our six markets, which highlights the importance of bringing on the new capacity in this region,” President, Director and CEO Steve Smith said.

Equinix isn’t alone in feeling cramped for capacity. According to analysts, a capital crunch caused by the economic downturn is forcing organizations to lease data center space rather than build their own facilities. Nobody has the capital to build data centers right now, IDC analyst Michelle Bailey told Computerworld. “Anyone moving forward with new space has to consider a third-party operator,” she noted.

Meanwhile, enterprise-class data center space is in short supply, as the supply glut created during the dot-com boom has been absorbed in recent years. But what’s that mean to space seekers if third-party providers like Equinix are also being squeezed for space?

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