Texas Update

National Highlights

  • On a national basis,there are no indicators of oversupply of colocation or wholesale data center space.
  • There is potential for some markets to post a short-term surplus in either space,but the demand will offset supply.
  • Similar to the second quarter,the third quarter had slow leasing activity in the wholesale data center market. Pent-up demand should result in a strong fourth quarter.
  • Increased competition throughout the country led to a downward pressure on pricing in the colocation space during the third quarter.

Spotlight:Texas

  • There has been an influx of 300-600kW transactions in the market place.  The majority of those transactions . . . →Read More:Texas Update

New York Market Update

National Highlights

  • PowerLoft sold its 233,000-square-foot building in Manassas,Virginia,for approximately $115 million to Corporate Office Properties Trust. The property was 16 percent leased and continues to support the notion that REITS will provide liquidity for data center developers.
  • Given the number of transactions in the market,we should see a strong fourth quarter of leasing activity on a national basis.

Spotlight:New York

  • The entrance of 111 Eighth Ave. onto the investment sales market could create a shift in the Manhattan data center market.  A new owner may choose to maximize returns by converting existing office space into new data center space as . . . →Read More:New York Market Update

Northern California

National Highlights

  • Given the limited number of wholesale providers with proven track records,many investors trying to enter the sector  have changed their focus to managed service and hosting companies.
  • There is significant new wholesale  activity in tertiary markets including Charlotte,Indianapolis,Minneapolis,amongst others.

Spotlight:Northern California

  • There has been as much as 175 MW of data center development announced for delivery between now and the end of 2011. It remains to be seen how much will be built after Digital Realty Trust and Vantage Data Centers deliver.
  • The majority of this development is planned in Santa Clara,which is already the densest data . . . →Read More:Northern California

Mid-Year Report

Largest Wholesale Options Available For Immediate Occupancy

  • Orlando
  • Atlanta
  • Phoenix
  • New Jersey

Top Mistakes Made By Companies When Negotiating Data Center Leases

  • Expansion and contraction rights
  • Gross up provisions
  • Operating expenses and other add-ons
  • Security deposit
  • RAMP (i.e.,abatement and installation allowance)
  • Not being aware of lease comparables

States Not Charging Personal Property Taxes On Servers

  • Colorado
  • Illinois
  • Indiana
  • Kansas
  • Nebraska
  • North Dakota
  • Virginia
  • Wisconsin

Largest Wholesale Transactions Completed Year To Date

  • Rackspace  Chicago,IL | 4.3mW
  • Facebook  Ashburn,VA and Northern California | +12mW
  • Boeing  Phoenix,AZ | 6mW
  • Zynga  Santa Clara,CA and Ashburn,VA | . . . →Read More:Mid-Year Report

Chicago (Jun 2010)

National Highlights

  • Expect merger &acquisition activity to continue to increase  and valuations to rise further.
  • Chicago,Phoenix and Northern Virginia have been the two hottest wholesale data center markets during the first four months of 2010,with over 22 mW absorbed.
  • Knowing that tenants lack alternatives due to limited supply,landlords are demanding a 10-20% increase in rental rates for renewals.

Spotlight:Metro Chicago

  • Supply will continue to remain constrained in both downtown and the suburbs as currently none of the potential new buildings have financing or anchor tenants.
  • No new wholesale product has been delivered to the downtown market in 2010.
  • Demand from . . . →Read More:Chicago (Jun 2010)

Dallas (May 2010)

National Highlights

  • There is a shortage of wholesale options in every major U.S. data center market and given the timing of the speculative construction,we anticipate that continuing through the end of the year.
  • There are only 3 wholesale data centers in the U.S. with over 45,000 sf with 6 MW that can offer immediate occupancy.
  • There are 21 properties being marketed in the U.S. as powered shells. Only two properties have had any leasing activity in the U.S. during the last 3 years for a data center reuse. This should change as the aforementioned is leased up over the next twelve months.

Spotlight:Dallas-Fort Worth

Southeast Region (Apr 2010)

National Highlights

  • Phoenix (enterprise users),Northern Virginia (social networking and gamers),and Chicago (hosting) led leasing activity during 1st quarter.
  • There was over 400,000 square feet of wholesale data center leases signed in Q1,2010.
  • FIFA World Cup sends Content Delivery Network companies scrambling for infrastructure and connectivity from Dallas to the world.

Spotlight:Georgia

  • With more than 20% of Fortune 100 companies having a data center presence in Metro Atlanta,the area has long been a destination of choice for enterprise data centers.
  • Wholesale colocation in the Atlanta Metro area is dominated by Quality Technology Services.  With the company’s Suwannee facility full,and the . . . →Read More:Southeast Region (Apr 2010)

Northern Virginia (Mar 2010)

National Highlights

  • Lack of capital and strong demand has led to depletion of suitable options,causing many users to consider design build solutions and private capital sources.
  • Nationally,there are just six single-story properties that have over 30,000 square foot of raised floor built-out and available for occupancy today. These six options average 1.2 MW per 10,000 square foot.
  • On the investor side,there are only six data centers on the market for sale that were either built or renovated since 2001.  There are a couple of off market opportunities available as well  that will  be very attractive.

Spotlight:Northern Virginia

New York (Feb 2010)

National Highlights

  • 2009 was one of the slowest years ever for investment sales transactions. In all of the nation’s Central Business Districts combined,there were 85 office properties sold at prices over $15 MM for a total of$6 BB.
  • Despite its small size relative to the office market,investment sales of data centers saw the sale of 12 data center properties (10 to Digital Realty Trust) for approximately $1 BB.
  • There are several major enterprise users in the process of finalizing their transactions during the first quarter of 2010. In addition to Facebook announcing its new Oregon build-to-suit,it is likely another major user will announce a large build-to-suit . . . →Read More:New York (Feb 2010)

Northern California (Jan 2010)

National Highlights

  • 2010 will see a number of companies test the markets with initial public offerings. This will provide much needed capital for expansion.
  • The space is ripe for a consolidation of several regional colocation providers.
  • Demand from social gamers continues;Social gamers focus on expanding in data centers where social networking sites have space.
  • As pricing models have continued to change from cost/sf to cost on power allocation,companies have been challenged in determining fair market rental rates on renewals.

 Spotlight:Northern California

  • Historically,Santa Clara has been more attractive for data center users because  of Silicon Valley Power,a municipally owned power provider . . . →Read More:Northern California (Jan 2010)