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June 20, 2011
Is the current enthusiasm for launching data centers trending toward oversupply? Here are two developments out of New Jersey that suggest different answers…
The Wall Street Journal a few days ago suggested the New Jersey market is overbuilt. The paper, citing analysts, reported that developers in New Jersey have built too many server farms, contending that “development is likely to cool while the glut of space is absorbed.
The article, referring to a KeyBanc Capital Markets analysis, puts the Northern New Jersey vacancy rate at 14 percent. The average vacancy rate stands at around 5 percent in other major data center markets, according to the Journal.
MSPmentor last fall discussed the potential for data center providers to overshoot demand.
For a different take, consider the case of Net2EZ Managed Data Centers, a colocation and managed hosting firm based in Los Angeles. The company recently launched a data center in Piscataway, planning to tap “the growing demand for high density system applications and disaster recovery in the New York Metro area.” The data center initially offers 11,000 square feet with expansion capability.
Roger Kim, chief marketing officer at Net2EZ, said the company is looking to bring financial sector customers into the new center. He said the North Jersey location, about 30 miles outside of New York City, is ideal for disaster recovery.
Net2EZ targets customers who need a facility designed to handle high-density systems, but find wholesale data centers a poor fit. The economics of wholesale providers generally favor customers with high power and footprint demands.
Net2EZ’s Piscataway data center is built to support 22 kW per cabinet and 350 watts per square foot, Kim noted. He defined the company’s sweet spot as customers who need up to 20 to 30 cabinets.
Those customers, Kim said, “can’t afford a larger footprint and come to us at the retail level.”
It will be interesting to see how Net2EZ’s retail approach fares in the crowded New Jersey data center market.
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