Datacentre demand dwindles

Falling demand and falling supply - London's datacentre market reaches peculiar equilibrium

The credit crunch has seen demand for datacentre space in London dwindle rapidly, but IT managers hoping to seize the opportunity to secure prime locations on the cheap look set for disappointment.

Property service group CB Richard Ellis (CBRE) reported that the take-up of datacentre space in London during the first quarter of 2008 was the lowest since it began measuring demand in 2004.

Basic economics suggests that with falling demand, customers would routinely expect their bargaining power to increase. But Andrew Jay, head of technology practice at CBRE warns that the credit crunch has also impacted datacentre supply.
A year ago, when demand for datacentre facilities in London was at record levels, a number of property firms were covetously eyeing up the possibility of moving in to the datacentre market, he said.

"Now they can't raise the debt [needed to finance building the facilities]," Jay told IT Week. "So while demand has dropped, so has supply."

Jay added that while demand for datacentre facilities was at record levels during 2007, it would likely remain weaker for rest of 2008.