2010 is picking up steam, but most providers still feel challenged to meet sales targets, and they are conserving capital for their core markets, as opposed to expanding aggressively. Financing continues to act as a damper, but it’s still not exactly the behavior one would expect in a fast-growth, supply-constrained industry.
Regardless of the segment, Las Vegas appears to be one of the more attractive markets for new investment. With the exception of Switch, there is little supply at any level and growing awareness and demand from enterprises and mid-tier service providers. We are not aware of any wholesale provider active in the market today, which is a gap.
Arizona continues to receive strong attention from the West and Midwest, and pricing is currently at a premium to LA across all segments. The Chicago suburbs are awash with space, with both retail and wholesale providers challenged to meet sales targets. We also see active investment in Denver, Dallas, Silicon Valley, and Virginia, leading to adequate supply, though Facebook continues to consume large swathes of the market in both VA and Silicon Valley.
There are still opportunities to take over redundant facilities in most markets, at pennies to the dollar, and word has it that several clean room conversions will be brought to market in 2010, in California and Texas, among others, also at relative discounts to greenfield construction.
Broadly, we see the following all-in pricing levels (includes power, cooling, XCs) for new deployments at concurrently maintainable, N+1 facilities:
-> Premium Carrier Neutral, average deal of 20 to 30 KW = Over $500 / KW
-> Carrier Grade Colo, average deal of 10 to 20 KW = $350 to $450 / KW
-> Wholesale / Bargain Colo, 10 KW to 3 MW = $160 to $250 / KW
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