Tier1 Research has published the second iteration of its North American Multi-Tenant Datacenter Supply: Emerging Major Markets report for 2011. This report provides readers with an overview of 14 emerging major data center markets in North America, while offering actionable metrics around geographies and specific providers.

Tier1 Research first began evaluating the secondary, or 'emerging major,' markets in 2010 as multi-tenant data center providers looked to set up operations outside of the top six markets (New York, Northern Virginia, Chicago, Silicon Valley, Dallas, and Los Angeles), in areas that were underserved, resulting in demand that grew at surprising rates. Tier1 Research intends to continue studying additional emerging markets in North America and globally, and findings will be published annually. This report provides current supply, demand and utilization metrics, as well as market-specific analysis similar to Tier1 Research's previous supply reports. This report goes further in terms of sizing each market by existing supply levels, and it identifies the top three data center providers in each market.

Key report findings include:
  • 'Dominant' provider in each emerging major market: While the 14 emerging major North American markets in this report all have multiple multi-tenant data center providers (approximately 19 on average), each market also has a single provider that holds a significant share of that market (in terms of built-out operational space), ranging from 20 percent to 57 percent.
  • Markets are underserved but starting to attract interest: As access to capital tightened in late 2008 and throughout 2009, the little capital that was deployed was primarily invested in incremental capacity builds in the top six markets. This resulted in little investment in the emerging major North American markets over the same time period. But starting in 2010, interest and activity in these markets has increased.
  • Utilization beginning to mirror top markets: While utilization in the top six North American markets is quite high, at over 80 percent despite continued incremental expansions, the 14 major markets reviewed in this report also have a high average utilization rate of approximately 79 percent for 2011.
  • M&A opportunities available: Given the number of smaller data center providers in each market (from a single facility to a handful of facilities), increasing utilization of built capacity, continued lack of access to capital for the smaller data center providers to expand, and increasing demand for emerging major markets, several of the smaller companies in these markets make attractive acquisition targets for companies looking to expand into additional emerging major markets more quickly than by building.
"Our clients continue to ask us about more of the emerging major datacenter markets, which is why we expanded coverage this year to include 14 new markets," said Jeff Paschke, research manager for datacenters at Tier1 Research and lead contributing author. "The continued interest is not surprising considering the many opportunities found in these markets, including being underserved with fewer competitors than top markets; the lack of even a single wholesale datacenter provider in a few markets; and the fact that these markets continue to be fragmented, with over 170 providers in the 14 markets offering M&A opportunity," continued Mr. Paschke.

An executive summary of the report is available for download at www.tier1research.com. For additional information about the report, please send an inquiry email to alan.elworthy@tier1research.com.