Colocation operators expand to address escalating demand

19 Oct 2011

Unfazed by the wider global economic malaise, demand for retail colocation space is growing relentlessly. New data from TeleGeography’s Colocation Database show that vacancy rates in several major telecom markets fell sharply from 2010; for example, only 16 percent of retail colocation space in the Washington, D.C. metropolitan area was available as of September 2011, down from 30 percent the previous year. Vacancy rates fell 36 percent in New York and 26 percent in London between September 2010 and September 2011.

To keep up with demand, retail colocation operators are scrambling to build new sites. New York has experienced the greatest building boom—between September 2009-2011, more than 1.3 million square feet of new retail colocation space were constructed in the New York metropolitan area. Over the same time, Hong Kong and London each gained more than 400,000 square feet of new retail colocation space, while colocation space in San Francisco increased by 300,000 square feet.

Respondents to TeleGeography’s survey confirmed that the pace of new development was unlikely to abate in several major markets. More than 70 percent of operators who responded in Hong Kong and Washington, D.C. indicated plans for further growth. In the burgeoning secondary market of Seattle, where retail colocation vacancy rates are less than 20 percent, 80 percent of respondents indicated plans for further expansion.

“It’s unlikely that the pace of expansion will slow anytime soon,” noted TeleGeography analyst Jon Hjembo. “While operators are adding capacity, vacancy rates in a number of metro markets we surveyed remain under 25 percent.”

Notes (figure above): Based on data collected by TeleGeography in 2010 and 2011 from survey responses and public information. Percentages represent weighted average floor space, in order to account for the relative sizes of sites reporting.

TeleGeography’s Colocation Database is a comprehensive online guide to colocation service providers and sites around the world.

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