According to an intriguing Data Center Knowledge article today, the credit crisis is having a somewhat surprising effect in the market for data center square footage: increased leasing activity and shortened decision times. That’s right, less available cash for IT projects, yet more spending. One might even call it hoarding. Well, not on all things, just on space. What’s going on? It seems to be an object lesson in what happens when a red-hot industry can’t access enough funds to meet demand.
Demand for space has been like a locomotive, powerful and with huge momentum, the recession may be powerful enough to slow it but it will take a long time. Meanwhile, supply is set to dry up rather soon. It takes a long lead time to build out datacenter space and everyone knows it. So large buyers may need to conserve their cash, but they know they will need the space and can also see that this locomotive just doesn’t have enough track laid in front of it. They are, therefore, buying now while there is space to buy.
Many of these guys aren’t even ready to buy servers to put in the space, and they know they aren’t going to be ready soon. They just don’t want to be on the train when it goes off the rails. If things don’t improve in the capital markets relatively soon then 2010 is going to be a real pricing adventure.
If you haven't already, please take our Reader Survey! Just 3 questions to help us better understand who is reading Telecom Ramblings so we can serve you better!Categories: Datacenter · Financials