Colocation services provider Net Data Centers is selling facilities on the East Coast in order to exit bankruptcy. One New Jersey data center and three Northern Virginia data centers are currently for sale.
Net Data Centers filed for Chapter 11 bankruptcy protection in February, citing higher-than-average retail rates at its data centers and an inability to differentiate within the New York and Northern Virginia markets, which are historically highly competitive.
Kelly Morgan, research director of North American Data Centers at 451 Research, said that putting emphasis on differentiation is a way for colocation services providers to compete in a growing market, but not all companies are able to do it.
"[P]roviding services can put pressure on margins, which are thinner in many cases for firms that do not own their underlying facilities," she said.
Net Data Centers still operates facilities beyond those it's selling. The company, which changed its name from Net2EZ in February after filing for bankruptcy protection, has three Los Angeles data centers and one Singapore data center.
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