Take-up in the first three quarters of 2008 reached 93,080 m² (1 million ft²) across the five tier 1 markets. The high level of take-up witnessed so far this year is illustrative of the data centre market being less affected by the financial slowdown than other real estate markets. As such, we expect take-up for the full year to approach the levels of 2007, which had been a record year in the data centre market.
Total stock levels in the Carrier Neutral Hotel (CNH) market increased from 570,740 m² to 620,990 m², an increase of 50,250 m² (9%) since Quarter 2. This increase was due to the introduction to our statistics of new facilities in London, Amsterdam, Frankfurt and Paris. As a result, CNH availability increased from 132,870 m² to 167,490 m². Total CNH market vacancy stood at 26.97% with a fully-fitted vacancy rate of 13.46%.
Total market take-up for Quarter 3 was 28,940 m². This was a decrease on the previous quarter of 36%, however, it represented an increase on the same quarter last year of 25%.
The majority of take-up this quarter was in the CNH market, 15,940 m² (55%). There was a large shell deal in the Paris market of 13,000 m² which represented 45% of the total. This is illustrative of the impact of large shell deals on take-up levels. It is encouraging to see this type of transaction outside of London.
In terms of total take-up by market sector, 14,820 m² (51%) was to corporates, 9,660 m² (33%) was to the technology sector, 4,060 m² (14%) was in retail transactions and 400 m² (1%) was to system integrators. Given the turmoil in the wider real estate market, the data centre market is performing beyond our original expectations for 2008. We expect demand to drop off from this level in 2009, but we do not envisage the level of decline experienced in other real estate sectors.
MARKET VIEWCNH SupplyIn Quarter 3, total CNH stock increased by 50,250 m² (9%), from 570,740 m² to 620,990 m². This was due to an increase in stock across all five tier 1 markets, in particular an increase of shell & core space.
Typically offerings take two forms: retail colocation which are smaller facilities (1,000 to 3,000 m²) in which space is fitted with shared infrastructure; and larger wholesale space (typically 3,000 to 5,000 m²) in which space is fitted on a modular basis with dedicated infrastructure.
Of the total stock, 432,060 m² (70%) was fully-fitted space, 143,850 m² (23%) was shell & core space and 45,080 m² (7%) was central services space.
Total space was apportioned across all the five tier 1 cities as follows: 260,610 m² (42%) in London; 177,020 m² (29%) in Frankfurt, 83,460 m² (13%) in Paris; 63,540 m² (10%) in Amsterdam; and 36,360 m² (6%) in Madrid.
Year on year, total stock has increased by 86,340 m², which consisted of a steady increase of stock in all five tier 1 cities.
Market Take-up & DemandTotal take-up for the European tier 1 market in Quarter 3 was 28,940 m² which, although down on Quarter 2, represented an increase of 25% compared with the same quarter last year.
The majority of take-up for the European tier 1 market in Quarter 3 was in the CNH market, 15,940 m² (55%), with 13,000 m² (45%) in the shell market. The latter was a large shell deal in the Paris market. This coupled with a similar size shell transaction in Frankfurt in 2007 demonstrates the fact that London is no longer the only market where corporates have chosen to locate large new facilities.
CNH take-up was apportioned as follows: 6,920 m² (43%) in London, 3,320 m² (21%) in Amsterdam, 3,060 m² (19%) in Paris, 2,390 m² (15%) in Frankfurt and 250 m² (2%) in Madrid.
CNH AvailabilityOverall CNH availability increased since Quarter 2 from 132,870 m² to 167,490 m². Of total availability, 86,270 m² (52%) was shell & core space, 58,150 m² (35%) was fully-fitted space and 23,070 m² (14%) was central services space.
Availability was apportioned across the five tier 1 cities as follows: 70,460 m² (42%) was in London; 44,030 m² (26%) was in Frankfurt; 22,900 m² (14%) was in Paris; 15,340 m² (9%) was in Amsterdam and 14,760 m² (9%) was in Madrid.
The CNH market vacancy rate now stands at 26.97%, an increase from 23.28% in the previous quarter. The vacancy rate increased in all tier 1 markets with the exception of Paris, where vacancy dropped from 29.25% to 27.44%.
FORECASTGiven the uncertainty in the wider economy it is clear that the data centre market has not as yet been as significantly impacted as other real estate markets. We do not expect takeup levels to overtake those of 2007 (highest year recorded), however, take-up has already exceeded that for the whole of 2006 by 46%.
Whilst we expect demand in 2009 to further reduce from 2008, we do not expect demand to plummet. As underlying demand drivers remain, we envisage the trend shown throughout 2008 to continue. Due to capital constraints, third party operators providing opex solutions are likely to benefit.
MARKET FOCUSLondonTotal take-up this quarter dropped from 34,440 m² to 6,920 m². Although on the surface this is a significant decrease on the previous quarter (27,520 m²), 80% of last quarter’s take-up was in a shell transaction. All take-up in Quarter 3 was in the CNH Market, 6,920 m², which represents an increase of 16% on the previous quarter.
The majority of the 6,920 m² was apportioned in the technology sector (4,240 m², 61%) with the remainder being made up of 1,470 m² (21%) to corporates and 1,210 m² (17%) of retail transactions.
Total stock increased by 23,480 m² from 237,130 m² to 260,610 m². This is due to the introduction of two new facilities to our statistics.
Overall availability in the London market increased from 53,750 m² to 70,460 m², a rise of 16,710 m² (31%). Of this availability, 49,720 m² (70%) was shell & core space, 16,620 m² (24%) was fully-fitted space and 4,120 m² (6%) was central services space.
The vacancy rate increased this quarter from 22.67% to 27.04%.
Demand continues to remain buoyant in the London market: we expect to see at least one if not two large shell deals in Quarter 4.
FrankfurtTake-up in the Frankfurt market dropped from 5,550 m² to 2,390 m². All of this take-up was apportioned in the CNH market.
In terms of take-up, 1,420 m² (59%) was in the technology sector, 620 m² (26%) was in retail transactions and 350 m² (15%) was from corporates.
Total stock increased by 11,040 m² from 165,980 m² to 177,020 m². This is as a result of a new facility in Frankfurt and expansions at two existing facilities.
Total availability increased in Quarter 3 from 35,380 m² to 44,030 m² (24%). This was primarily due to an increase in shell & core stock from 6,700 m² to 15,160 m² (126%). Of the remaining availability, 22,130 m² (50%) was fully-fitted space and 6,740 m² (15%) was central services space. The majority of available fully-fitted space is in one building – Data 110.
The vacancy rate increased this quarter from 21.32% to 24.87%.
AmsterdamIn Quarter 3 we saw an increase in take-up on the previous quarter of 590 m² from 2,730 m² to 3,320 m², all being apportioned in the CNH market.
Of this take-up, 2,000 m² (60%) was from the technology sector and 1,320 m² (40%) was in retail transactions.
Total stock rose from 52,560 m² to 63,540 m², an increase of 10,980 m². This reflects the introduction of 3 new facilities in Amsterdam.
Total availability increased this quarter from 7,650 m² to 15,340 m². The space available was apportioned as follows: 12,760 m² (83%) was fully-fitted space, 1,830 m² (12%) was shell & core space and 750 m² (5%) was central services space.
The vacancy rate in Quarter 3 stood at 24.14%, a rise from 14.55% in Quarter 2 as a consequence of new stock being brought to the market.
ParisTake-up in Paris in Quarter 3 was 16,060 m², which is the highest quarterly take-up since we began our statistical analysis in 2001. However, the majority of this take-up was a large shell transaction (13,000 m², 81%). The remaining 19% of take-up was in the CNH Market (3,060 m²).
Of the 3,060 m² of CNH take-up, 2,000 m² (65%) was from the technology sector, 660 m² (22%) was in retail transactions and 400 m² (13%) was from system integrators.
Total stock rose by 2,000 m² following the introduction of a new facility.
Overall availability stood at 22,900 m², a drop on last quarter of 930 m². We are continuing to see a steady decline of availability since the last proliferation of new stock to market in Quarter 4 2006. Availability in Quarter 3 was made up of 18,770 m² (82%) of shell & core space, 3,910 m² (17%) of fully-fitted space and 220 m² (1%) of central services space.
The Paris vacancy rate stands at 27.44%, a decrease from 29.24% in Quarter 2. We expect to see another large transaction in the wholesale CNH market for Quarter 4, which will decrease the vacancy rate further. Consequently we expect to see a number of facilities opening over the short to medium term in Paris.
MadridMadrid remains the slowest of the tier 1 markets. Take-up in Madrid reduced in the third quarter with 250 m² of CNH take-up which was entirely made up of retail transactions.
Take-up was still higher than in Quarter 3 2007 (130 m²). Total stock increased by 2,750 m² owing to an expansion of an existing facility.
Availability increased by 2,500 m² to 14,760 m², which was apportioned as follows: 11,240 m² (76%) in central services space; 2,730 m² (18%) in fully-fitted space; and 790 m² (5%) in shell & core space.
The vacancy rate stood at 40.59%, an increase from 36.48% in the previous quarter.
Tags: Hosting & Colocation, Design & Facilities Management