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Data Centre take-up figures quietly improve, with indications of significant supply shortfall by end of 2009
Jones Lang LaSalle has published the second Data Centre Barometer (DCB) research report. The report focuses on the European data centre real estate market and features an independent market survey (undertaken by iXConsulting –the leading independent data centre consultancy). Data Centre Barometer 2 (DCB2) reflects the views and expectations of the European data centre and mission critical real estate market and respondents who control data centre portfolios in excess of 10.2 million sq ft of technical space took part in the survey.
Commenting on DCB2, Mark Larard, director of Jones Lang LaSalle’s Data Centre Advisory Group said: “In our first Data Centre Barometer, our view was that the market was quietly optimistic, with a good amount of qualified demand and a lack of immediate supply to satisfy it and this theme continues. Whilst we are not seeing single requirements for large self contained buildings or sites that were prevalent from 2005 to 2008 driven by the investment banking sector, we are experiencing banks - alongside other corporates taking smaller data centre holdings on an OPEX basis, thereby maintaining flexibility, keeping the expenditure off balance sheet and benefiting from shorter lead-in times. In the last survey, our respondents indicated that they did not anticipate taking on new holdings during the first six months of 2009, and they have stuck to their word.”
Jones Lang LaSalle monitored take up of technical accommodation in the UK during the first half of 2009, accounted for approximately 117,000 sq ft, (Q1 22,000 sq ft, Q2 95,000 sq ft) with the largest single letting being 22,000 sq ft taken by Tata Communications at Digital Realty Trust’s Cressex Data Centre which exchanged in January 2009. Average size of new (and anticipated) lettings has fallen to approximately 10,000 sq ft, from 20,000 sq ft in 2008, with lead in times foe requirements also reducing.
Mark Larard continued: We are currently monitoring approximately 110,000 sq ft of wholesale technical space which is actively being acquired in and around London (i.e. these deals are advanced and some ‘in solicitors hands’ already) in addition to healthy interest across other tier 1 cities. For London, 110,000 sq ft may not seem a large amount, but when you consider a further 400,000-500,000 sq ft of potential wholesale and retail requirement likely to come to market in the final quarter of the year or the first part of 2010, and latent stock in the order of 150,000 sq ft of wholesale space capable of being fitted out within 6 months, then there appears to be a shortfall of space and a pipeline squeeze. Rents are already rising, and any new development which started construction today, would only be able to deliver technical space ready for tenant in a minimum of 10-12 months.”
DCB2 respondents indicate that market confidence remains high. Mark Larard concluded: “When you consider just how far the world economy has travelled between January and July (when the surveys were undertaken), then you can begin to understand why capital expenditure to acquire data centre space or start to speculatively develop new stock might have taken longer to achieve than initially anticipated. For developers with stock capable of being readied quickly, or who can demonstrate definite intention and timeline for delivery, the market appears positive.”
Notes to Editors
Responses were received from a broad range of influential data centre floorspace developers, owners and occupiers across Europe, as well as a diverse group of ‘other’ business categories offering data centre support services. The first part of the survey looks at occupational issues with results taken from four main groups of owner or occupier; Colocation Operators, Carrier/IT Integrator/Web Hosters, Corporate Occupiers and Real Estate Developer/Investors. Our Opinion section covers all respondents.
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