North American Multi-Tenant Datacenter Supply: Emerging Major Markets – 2012

SEPTEMBER 2012

451 RESEARCH: DATACENTER© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

EXECUTIVE OVERVIEW

NORTH AMERICAN MULTI-TENANT DATACENTER SUPPLYEMERGING MAJOR MARKETS – 2012

DATACENTER

451 RESEARCH: DATACENTER © 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

REPORT SNAPSHOTTITLE North American Multi-Tenant Datacenter Supply:

Emerging Major Markets – 2012

ANALYSTS Jeff Paschke, Research Director, Datacenters, Kelly Morgan, Research Manager, Datacenters, Rick Kurtzbein, Research Analyst, Datacenters, Michael Levy, Analyst, Datacenters

RELEASE DATE September 2012

LENGTH 79 pages

EXECUTIVE SUMMARYThe North American Multi-Tenant Datacenter Supply: Emerging Major Markets 2012

report provides readers with an overview of 10 emerging major datacenter markets

in North America: Austin/San Antonio, Denver, Detroit, Houston, Minneapolis,

Philadelphia, Portland, San Diego, Tampa and Toronto.

In this report, ‘multi-tenant datacenters’ are considered multi-customer colocation and

wholesale facilities. Single-user enterprise datacenters and single-tenant datacenters are

specifically excluded from this analysis.

This report is our second look at emerging major markets in North America. In it, we

provide current supply, demand and utilization metrics, as well as market-specific

analysis similar to Tier1 Research’s previous supply report series. We also size each

market by existing supply levels, include maps of datacenter locations, and identify all

providers, as well as citing the top three providers in each market.

The multi-tenant datacenter landscape continues to transform, most recently as a

result of trends that emerged in the industry owing to the economic downturn. In more

recent years and better economies, analysts and industry insiders tended to emphasize

the importance of the top North American datacenter markets of New York, Northern

Virginia, Chicago, Silicon Valley, Dallas and Los Angeles, while relegating other major

markets to a lesser position as disaster-recovery sites or for less dynamic, more localized

SMB customers.

Times have changed, however. Beginning in late 2009 and continuing through 2012, we

have seen more serious interest in emerging major markets for datacenters in terms of

both supply and demand.

NA MTDC SUPPLY: EMERGING MAJOR MARKETS – 2012© 2012 451 RESEARCH, LLC AND/OR ITS AFFILIATES. ALL RIGHTS RESERVED.

EXECUTIVE OVERVIEW

KEY REPORT FINDINGS• A large single provider in each emerging major market: While the 10 emerging major

North American markets in this report all have multiple multi-tenant datacenter

providers (roughly 16 on average), each market also has a single provider that holds

a significant share of that market (in terms of built-out operational space), ranging

from 20% to 52%.

• Markets are underserved but starting to attract interest: As access to capital tightened

in late 2008 and throughout 2009, the little capital that was deployed was primarily

invested in incremental capacity builds in the top six markets. This resulted in little

investment in the emerging major North American markets over the same time

period. However, starting in 2010, interest has resumed in these markets, and activity

has increased.

• Utilization beginning to mirror top markets: While utilization in the top six North

American markets is quite high – at over 80%, despite continued incremental

expansions – the 10 emerging markets reviewed in this report also have a high

utilization rate, of about 76% on average for 2012.

• M&A opportunities available: Given the number of smaller datacenter providers in

each market (those with a single facility up to a handful of facilities), increasing

utilization of built capacity, the continued lack of access to capital for smaller

datacenter providers to expand, and increasing demand in emerging major markets,

several of the smaller providers in these markets make attractive acquisition targets

for larger providers looking to expand into additional emerging major markets more

quickly than by building facilities themselves.


COMPANIES INCLUDED IN THIS REPORT

123Net

365 Main

3z Canada

Accelerated Networks

Advanced Knowledge

Networks

Allied Properties REIT

Alpheus Communications

Amanah Tech

American Internet Services

Atomic Data

Awecomm

Bell Canada

BHI Advanced Internet

Caneris

Capris Hosting

CDW Berbee

Centrilogic

CenturyLink

CityNAP

Cogeco Data Services

Cogent

Colo 5

ColoDetroit

Cologix

Colosseum Online

Core NAP

CoreSite

CyrusOne

D3 Networks

Data Centers Canada

Data Foundry

Data-Vault

DBSi

Digital Edge

Digital Realty Trust

Directlink Technologies

Distributed Systems

Services

Dynaworx

E Solutions

EasyStreet Online Services

Equinix

FIBERTOWN

Fork Networking

FORTRUST Solutions

Fortune Data Centers

Griffin Partners

Handy Networks

Hivelocity

Honeycomb Internet

Services

Hosting.com

Hostway

I2B Networks

Implex

Infinity Internet

Interlink Connectivity

Internap Network Services

ipHouse

IPR International

Latisys

Level 3 Communications

Liberty Center One

LightPoint Colocation &

Hosting

Markley Group

Massive Networks

Montgomery Westland

Morgan Reed Group

MTS Allstream

NaviSite

Necessary Resources

Negma Business Solutions

Network Medics

Neutral Data Centers

Nexcess

Next Level Internet


EXECUTIVE OVERVIEW

Nugget Networks

Online Tech

OnRamp

OnX Enterprise Solutions

Opus Interactive

Peak 10

PEER 1 Hosting

Philadelphia Technology

Park

Portland NAP

Primus Business Services

Priority Colo

Q9 Networks

Quasar Data Center

Quonix Networks

Rapid Systems Inc

Razor Servers

redIT

Riptide Hosting

RockyNet

RT Software Systems (RT

Software Hosting)

Sago Networks

SATC Co-Location Services

Savvis

ScaleMatrix

Server Tune

ServOnDemand

SevenL Networks

Sidera Networks

Site B Data Services

SpireTech

Sterling Communications

StratITsphere

Stream Data Centers

SunGard

Synergy Broadband

Tata Communications

TELUS

Terremark

The Minnesota Gateway

Time Warner Cable

Travelport

tw telecom

US Internet Corp

US Signal

Utropicmedia

Velocity Telephone

VeriSpace

Verizon

Verizon Business

ViaWest

VISI

Waveform Technology

Windstream Hosted

Solutions

Xand

XO Communications

zColo

COMPANIES INCLUDED IN THIS REPORT


TABLE OF CONTENTS

INTRODUCTION 1

KEY REPORT FINDINGS . . . . . . . . . . . . . . . . . . . . . . 1

METHODOLOGY . . . . . . . . . . . . . . . . . . . . . . . . . 2

EMERGING MAJOR MARKET TRENDS 5

NOT JUST FOR DISASTER RECOVERY . . . . . . . . . . . . . . . . . 5

CORRELATION TO MSA SIZE OR GDP . . . . . . . . . . . . . . . . . 6

FIGURE 1: Top 50 Metropolitan Areas in North America 6

FIGURE 2: Top 50 Metropolitan Areas in North America by GDP 8

FIGURE 3: Comparing GDP and Population with Emerging

Major Datacenter Market Size 9

MARKET OPPORTUNITIES . . . . . . . . . . . . . . . . . . . . . 10

FIGURE 4: Emerging Major Markets – Market Share of Market Leader 10

EMERGING MAJOR MARKET PROFILES 12

AUSTIN/SAN ANTONIO . . . . . . . . . . . . . . . . . . . . . . 12

FIGURE 5: Multi-Tenant Datacenter Providers – Austin/San Antonio 14

FIGURE 6: Multi-Tenant Datacenter Market Share Leaders – Austin 15

FIGURE 7: Multi-Tenant Datacenter Map – Austin/San Antonio 16

FIGURE 8: Multi-Tenant Datacenter Supply and Demand – Austin 17

FIGURE 9: Multi-Tenant Datacenter Utilization – Austin 17

FIGURE 10: Multi-Tenant Datacenter Pipeline – Austin 18

DENVER . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19

FIGURE 11: Multi-Tenant Datacenter Providers – Denver 21

FIGURE 12: Multi-Tenant Datacenter Market Share Leaders – Denver 22

FIGURE 13: Multi-Tenant Datacenter Map – Denver 23

FIGURE 14: Multi-Tenant Datacenter Supply and Demand – Denver 24

FIGURE 15: Multi-Tenant Datacenter Utilization – Denver 24

FIGURE 16: Multi-Tenant Datacenter Pipeline – Denver 25

DETROIT . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

FIGURE 17: Multi-Tenant Datacenter Providers – Detroit 28

FIGURE 18: Multi-Tenant Datacenter Market Share Leaders – Detroit 29

FIGURE 19: Multi-Tenant Datacenter Map – Detroit 30


EXECUTIVE OVERVIEW

FIGURE 20: Multi-Tenant Datacenter Supply and Demand – Detroit 31

FIGURE 21: Multi-Tenant Datacenter Utilization – Detroit 31

FIGURE 22: Multi-Tenant Datacenter Pipeline – Detroit 32

HOUSTON . . . . . . . . . . . . . . . . . . . . . . . . . . . 33

FIGURE 23: Multi-Tenant Datacenter Providers – Houston 34

FIGURE 24: Multi-Tenant Datacenter Market Share Leaders – Houston 35

FIGURE 25: Multi-Tenant Datacenter Map – Houston 36

FIGURE 26: Multi-Tenant Datacenter Supply and Demand – Houston 37

FIGURE 27: Multi-Tenant Datacenter Utilization – Houston 37

FIGURE 28: Multi-Tenant Datacenter Pipeline – Houston 38

MINNEAPOLIS . . . . . . . . . . . . . . . . . . . . . . . . . 39

FIGURE 29: Multi-Tenant Datacenter Providers – Minneapolis 41

FIGURE 30: Multi-Tenant Datacenter Market Share Leaders

– Minneapolis 42

FIGURE 31: Multi-Tenant Datacenter Map – Minneapolis/St Paul 43

FIGURE 32: Multi-Tenant Datacenter Supply and Demand

– Minneapolis 44

FIGURE 33: Multi-Tenant Datacenter Utilization – Minneapolis 44

FIGURE 34: Multi-Tenant Datacenter Pipeline – Minneapolis 45

PHILADELPHIA . . . . . . . . . . . . . . . . . . . . . . . . . 46

FIGURE 35: Multi-Tenant Datacenter Providers – Philadelphia 47


– Philadelphia 48

FIGURE 37: Multi-Tenant Datacenter Map – Philadelphia 49

FIGURE 38: Multi-Tenant Datacenter Supply and Demand

– Philadelphia 50

FIGURE 39: Multi-Tenant Datacenter Utilization – Philadelphia 50

FIGURE 40: Multi-Tenant Datacenter Pipeline – Philadelphia 51

PORTLAND . . . . . . . . . . . . . . . . . . . . . . . . . . . 52

FIGURE 41: Multi-Tenant Datacenter Providers – Portland 54


– Portland 55

FIGURE 43: Multi-Tenant Datacenter Map – Portland 56

FIGURE 44: Multi-Tenant Datacenter Supply and Demand – Portland 57


FIGURE 45: Multi-Tenant Datacenter Utilization – Portland 57

FIGURE 46: Multi-Tenant Datacenter Pipeline – Portland 58

SAN DIEGO . . . . . . . . . . . . . . . . . . . . . . . . . . . 59

FIGURE 47: Multi-Tenant Datacenter Providers – San Diego 60

FIGURE 48: Multi-Tenant Datacenter Market Share Leaders – San Diego 61

FIGURE 49: Multi-Tenant Datacenter Map – San Diego 62

FIGURE 50: Multi-Tenant Datacenter Supply and Demand – San Diego 63

FIGURE 51: Multi-Tenant Datacenter Utilization – San Diego 63

FIGURE 52: Multi-Tenant Datacenter Pipeline – San Diego 64

TAMPA . . . . . . . . . . . . . . . . . . . . . . . . . . . . 65

FIGURE 53: Multi-Tenant Datacenter Providers – Tampa 66

FIGURE 54: Multi-Tenant Datacenter Market Share Leaders – Tampa 67

FIGURE 55: Multi-Tenant Datacenter Map – Tampa 68

FIGURE 56: Multi-Tenant Datacenter Supply and Demand – Tampa 69

FIGURE 57: Multi-Tenant Datacenter Utilization – Tampa 69

FIGURE 58: Multi-Tenant Datacenter Pipeline – Tampa 70

TORONTO . . . . . . . . . . . . . . . . . . . . . . . . . . . 71

FIGURE 59: Multi-Tenant Datacenter Providers – Toronto 72

FIGURE 60: Multi-Tenant Datacenter Market Share Leaders – Toronto 73

FIGURE 61: Multi-Tenant Datacenter Map – Toronto 74

FIGURE 62: Multi-Tenant Datacenter Supply and Demand – Toronto 75

FIGURE 63: Multi-Tenant Datacenter Utilization – Toronto 75

FIGURE 64: Multi-Tenant Datacenter Pipeline – Toronto 76

MULTI-TENANT DATACENTER TAXONOMY 77

MULTI-TENANT DATACENTERS . . . . . . . . . . . . . . . . . . . 77

COLOCATION . . . . . . . . . . . . . . . . . . . . . . . . . . 77

WHOLESALE DATACENTER . . . . . . . . . . . . . . . . . . . . . 78

INTERCONNECTION . . . . . . . . . . . . . . . . . . . . . . . . 78

MANAGED HOSTING . . . . . . . . . . . . . . . . . . . . . . . 78


EXECUTIVE OVERVIEW

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North American Multi-Tenant Datacenter Supply: Emerging Major Markets – 2012