FOCUS NEW YORK
Issue 14, February/March
SPACE INVADERS: THE TAKE UP OF
COLOCATION IN NYC AND NEW JERSEY The region’s connectivity and client base keeps the market hungry for data center capacity. By Yevgeniy Sverdlik
demand for both retail and wholesale colocation space in the market, which analysts and major colo players expect to be sustained into the near future.
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High network density and landing stations for major intercontinental submarine cables + Fortune 500 and Fortune 100 companies’ headquarters + a multitude of small and mid- size Internet companies + Wall Street amid a recovering economy = a strong demand for data center space.
Retail colocation in New York City (NYC) and New Jersey is where some of the biggest wholesalers put a lot of construction crews to work last year. This is not a strict separation, as wholesale companies such as Digital Realty Trust have space in the city (DRT leases a lot of its NYC space to Telx, a retail colo provider), and both Telx and Equinix have retail facilities in New Jersey.
NYC SHORT ON QUALITY SPACE
Major retail colocation providers continue to thrive in NYC and continue to observe strong demand from service providers, small and medium businesses and the financial services sector. The supply of unoccupied quality data center space is constrained and this kind of space comes at a high premium.
Take, for example, the 60,000 sq ft data center at 85 10th Ave, recently leased by the retail provider Telehouse. Michael Mandel, member of the Grubb & Ellis National Data Center practice group, says the former Lehman Brothers data center was so highly sought after that it was sold shortly after enter the market to Telehouse which took a 15-year lease.
The facility houses a 40,000 sq ft data center floor. It came with all infrastructure equipment for which the tenant would not have to pay – one reason it was snapped up so fast.
Fred Cannone, director of sales and marketing at Telehouse, says Telehouse won the bidding
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www.datacenterdynamics.com
he area’s York-New Jersey area’s attributes
have ensured healthy
The DuPont Fabros facility in New Jersey, which came to market in 2010
competition because it was also willing to make an additional investment in the facility. “It’s not like we stepped in and turned the equipment back on,” he says. Telehouse rebuilt the uniterruptible power supply (UPS) systems and upgraded the power distribution systems. Eventually, the provider is also planning to add more generator capacity.
Telehouse has two more data centers in the city. Including 85 10th Ave, the company has a total of 300,000 sq ft and about 10MW of power in the market.
One of the other two properties, at 25 Broadway, has about 20% of the 50,000 sq ft data center floor still available, Cannone says. The other, a 100,000 sq ft data center at 7 Teleport Dr, is about 25% unoccupied.
NYC’S CUSTOMERS
Telx, one of the biggest retail colo players in the market, has about 200,000 sq ft of space in New York City. Brad Hokamp, the company’s chief marketing officer, says its data center at 111 8th Ave leased from DRT is about 50% utilized. It had two major expansions in 2010. The building itself is owned by Google, which wanted office space, from Taconic Investment Partners, Jamestown Properties and the New York State Common Retirement Fund last year. The company’s other NYC facility is about 75% occupied.
The bulk of Telx’s customers on 8th Ave are in the financial services industry. Its customer base at 60 Hudson is dominated by carriers.
Because of high carrier density at both locations, Telx has also had success in selling to providers of cloud-based services.
Telehouse, its newly acquired space at 85 10th Ave in hand, is focused on going after small- and medium-size businesses. Cannone says the company is aiming to be either a “total- solution provider” for customers that cannot afford to build out their own IT infrastructure, or a provider for colocation and IT support.
The market for such services targeted at small and medium-size businesses in NYC is underserved, according to Cannone. “These folks typically do need, at some level, additional IT expertise.”
As previously mentioned, Telx’s efforts in the region are not focused solely on downtown New York.
The company is currently
expanding inventory in New Jersey (NJ). Once the second phase of its facility comes online, Telx will have about 35,000 sq ft of gross space in NJ. Including the new phase, the facility is about half full, Hokamp says.
CARRIERS – NYC’S KEY ASSET
Equinix, a large Telx competitor, has a massive presence in New Jersey. Jarrett Appleby, the colo retailer’s chief marketing officer, says it has more than 700,000 sq ft of space in the state, the bulk of which is at its campus in Secaucus.
Equinix announced the latest expansion - an additional 1,200 cabinet equivalents - in Secaucus in May 2010. The provider said
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