London Data Centres to run out of space?

Based on recent research, UK Data Centres – the carrier neutral market - from consultancy BroadGroup, data centre space in London will increase by around 45% through to 2012. That London is approaching full utilisation does not detract from the fact that it is the most promising market in Europe - by size and activity.

In the meantime, what will happen if London runs out of space or power? These issues will form the basis of a new forum taking place at the forthcoming Data Centres Europe event taking place March 21-23 at the Millennium London Mayfair Hotel.

The European panel comprising of representatives from operating companies in each key market will provide a perspective of Paris, Amsterdam, Frankfurt and Geneva and early results of a forthcoming study to be previewed at the event suggest this may also be good for new investment.

The new report – European Data Centres II - to be published in March identifies new outside investors who are entering the UK and other markets, and are prepared to take larger risks on development.

Whether sentiment towards investment in data centres has now changed, and whether more will follow the IPO route, is the subject of another panel debate at the event. Potential data centre opportunities in central and eastern Europe will also be considered.

“The CEE remains an opportunity, but current stock appears to lack scale and needs investment and modernisation,” commented Keith Breed, research director at BroadGroup. “Most of the data centres in the region are being used for off-shoring and based on a self-build model, often with a contact centre development attached.”

Other factors impacting the London market will form a core theme of the panel discussion. The likely migration towards cheap power locations, due to carbon-neutral facilities and cheap renewable power will act as new drivers, particularly if directives mooted by the GLA come in to force.

Telcos too are seeing the need to re-invest in space to ensure that they are fit for purpose; at present many are simply node/TDM sites.

Much of the next phase of data centre growth will be driven by demand from systems integrators and corporate customers who are facing their own data centres reaching saturation. The UK Data Centres report has already identified the lack of new sites and increasing challenges and regulatory involvement in power and cooling issues which is making corporates far more willing to outsource. There are also specific market segments that absolutely need to use a third party, with the online gaming and gambling companies the most obvious example.

IT in the Financial Services sector forms the basis of new research by BroadGroup to be highlighted at the event, and includes a review of the trend to migrate to third party outsourcing. Yet at a time of increased demand from a range of new customers, the comparative lack of space in London creates a sellers marketplace, and prices can rise accordingly.