The Next Real Estate Bubble? Think Blinking Lights

The data center and so called “co-location” market (sharing space with other companies in an environment controlled by one landlord) has been really hot over the past couple of years as companies seek to move their critical data operations out of their office space. Chief Information Officers (“CIO’s”) have largely been successful in convincing senior management that data integrity is paramount and data centers don’t belong in the headquarters.

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For a variety of reasons, both regulatory and practical, moving critical facilities off-site makes a lot of sense. However, cash-strapped corporate America seems to be looking for alternatives to construction of traditional data centers. This is not surprising as best-in- class facilities can cost many millions and years to build. As a result, the co-location market has gone bonkers, and of course, developers are racing to meet demand – both real and forecasted. This article in Data Center Journal suggests that the market may be in the early stages of a bubble.

So, when your CIO suggests the next big data center move, we recommend you carefully evaluate the pricing, but as important, check the credit of the landlord. It’s one thing to have an office building get into financial trouble, but the home of your company’s global data center going dark is just hard to grasp.

Ken Ashley

Source: Data Center Journal

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