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Emerging Multitenant Data Center Markets Underserved But Heating Up

A new report from Tier 1 Research finds that the emerging North American multitenant data center (MTDC) markets--including Atlanta, Boston, Miami, Montreal, Phoenix, San Diego and Toronto--are underserved but are starting to attract interest. The 100-page-plus report looks at current supply, demand and utilization metrics, sizing up each of the next 14 of the top 20 North American markets--after New York, Los Angeles, Chicago, Washington, Houston and Dallas--by existing supply levels, and identi

A new report from Tier 1 Research finds that the emerging North American multitenant data center (MTDC) markets--including Atlanta, Boston, Miami, Montreal, Phoenix, San Diego and Toronto--are underserved but are starting to attract interest. The 100-page-plus report looks at current supply, demand and utilization metrics, sizing up each of the next 14 of the top 20 North American markets--after New York, Los Angeles, Chicago, Washington, Houston and Dallas--by existing supply levels, and identifying the top three data center providers in each market.

A part of the 451 Group, Tier 1 covers consumer, enterprise and carrier IT services, particularly hosting, co-location, content delivery, Internet services, software as a service a (SaaS) nd enterprise services. Jeff Paschke, research manager for data centers at Tier 1, says interest beyond the top six markets created demand for tracking what was happening in the top metropolitan areas in North America. Last September, the company did its first survey of eight emerging markets and expanded to 14 cities for this report. More than 170 MTDC providers have been examined, and while the market is clearly fragmented, there are definite opportunities for consolidation, he says.

Each of these markets averages 19 MTDC providers, says Paschke, but the dominant provider accounts for 20% to 57% share of the market, in terms of built-out operational space. Utilization is nearing that of the top six markets. The second tier markets are approaching average utilization rates of 79% for 2011, compared with the major markets' utilization in excess of 80%, he says.

Tier 1 defines MTDCs as facilities that are normally owned by firms that provide Internet infrastructure services, including data center services, to multiple customers. Some firms lease data center space to other providers, as well as lease space to individual enterprises. Co-location data centers can be considered the "retail" version of MTDC, where space is sold on the basis of individual racks/cabinets or cages that typically range from 500 to up to 5,000 square feet in size. Moving up in size, the wholesale data center providers typically range in size from 10,000 up to 50,000 square feet, and tend to have fewer customers and services, says Paschke.

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