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Colocation expansion widespread, but growth rates vary

18 Nov 2013

New data from TeleGeography’s Colocation Database reveal that many metro areas have seen rapid increases in colocation capacity in recent years, but that growth rates in a number of traditional hub markets have been slower.

Colocation capacity growth in the North American markets of Dallas, Seattle, and Toronto was notably high from 2010 to 2013. Capacity increased between 20% and 28% compounded annually in each market, to reach 3.3, 1.2, and one million square feet of gross floor space, respectively. Capacity in New York and Washington, D.C., two of the world’s largest colocation markets by floor space, grew more moderately at 12% and 11%, respectively, to reach 5.5 and 4.8 million square feet.

In Europe, capacity grew faster in Paris than in other markets, at 25% compounded annually to 2.6 million square feet. Growth was also robust in Frankfurt, Zurich, and Moscow, where gross colocation space increased between 16 and 18 percent compounded annually. By contrast, in London, which is Europe’s largest market with nearly 4.5 million square feet of gross colocation space, capacity increased only 8% compounded annually between 2010 and 2013.

In Asia, colocation capacity grew 15% compounded annually in both Singapore and Mumbai, while that in Hong Kong grew 34% per year, due largely to sizable investments by just a few operators. With nearly five million square feet of gross floor space, Tokyo is Asia’s largest colocation market, but capacity there increased only 4% annually over the past four years.

Colocation operators aim to invest in new capacity in anticipation of market demand, but in some markets, capacity increases have led to high vacancy rates and lowered expectations for future growth. ‘Vacancy rates in New York, Frankfurt, Paris, and London are now 40%, and most operators there indicate little need for further expansion in the near term,’ said TeleGeography analyst Jon Hjembo. ‘However, vacancy rates fluctuate widely within metro areas. Colocation sites that are in high demand have consistently limited or non-existent availability, warranting expansion, while operators of other sites may struggle to gain a foothold.’

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

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