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Colocation vacancy rates are on the rise

17 Oct 2012

In a reversal of trends seen in the past two years, retail colocation vacancy rates are rising. According to new data from TeleGeography’s Colocation Database, colocation site availability increased in a number of metro areas between September 2011 and September 2012. For example, vacancy levels in Hong Kong and Los Angeles increased sharply, from 19 percent to 34 percent and 21 percent to 36 percent, respectively.

Although vacancy rates in London increased from 17 percent to 28 percent last year, over 70 percent of operators surveyed by TeleGeography said that they will continue to add colocation capacity in London in anticipation of steady demand growth. Three new data centers, with more than 160,000 square feet of gross floor space, are scheduled to enter service in London before year-end 2012. A similar trend is apparent in Los Angeles, where colocation vacancy rates increased 15 percent in 2012. Nevertheless, providers here plan to expand available capacity at nearly 80 percent of the sites surveyed.

“Increased vacancy rates do not necessarily portend a long-term supply glut,” said TeleGeography analyst Jon Hjembo, “nor are operators’ continued expansion plans clear evidence of irrational behavior.” In some markets, including Hong Kong and Los Angeles, increased vacancy rates simply reflect the introduction of one or two unusually large new facilities. Moreover, given the long lead times required to build new colocation facilities, operators must begin developing new sites well before their existing facilities are full. “Despite the increase in vacancies, demand for colocation services remains strong,” said Hjembo. “In fact, colocation sites built in the past two years are filling at a faster rate than comparable sites were last year.”

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

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