Denver market continues steady growth as MTDC providers double down

Multi-tenant datacenter (MTDC) supply remains healthy in Denver, with several providers currently working to add capacity. The market benefits from both local and regional demand coming from a strong business mix in the city, complemented by startup communities in Denver and Boulder. However, large-scale wholesale deals seem to be passing over Denver in favor of Phoenix and Las Vegas, despite Denver having a better climate and generally lower prices. These are just some of the findings in our newly released Technology & Business Insight report, Colorado: Multi-Tenant Datacenter Market, which examines the overall size, scope and growth of the multi-tenant datacenter (MTDC) market in all of Colorado, and specifically Denver. This report represents our first detailed look at the market which is a potential growth area for datacenter businesses in the US. Additionally, the report provides an overview of the competitive dynamics in the Colorado market, a 451 Research Market Map of the competitors in Denver, market share of the dominant providers, supply-demand and utilization trends, and discussion of planned MTDC builds.

The 451 Take

Colorado has been the site of many 'rushes' throughout its history: first gold and silver, then flowers and, most recently, marijuana. However, area MTDC providers seem to be preparing for a rush of their own, a 'data rush.' Despite the state having no incentive packages for datacenter providers, the market's upward growth continues. Several providers have entered Colorado recently through acquisition, and several others are in the midst of expanding facilities in order to accommodate demand. Perhaps this isn't terribly surprising because Colorado has a lot going for it. The state has a very favorable climate for datacenters, it is positioned nicely for disaster recovery workloads or mid-country deployments, it has a lot of long-haul fiber that passes through it, and it provides the right price from a tax and power perspective (Colorado Springs specifically offers some of the lowest-priced power in the country). Furthermore, people love living there! As the large cloud, content and media providers look to push into more secondary markets around the country, it will be interesting to watch how Colorado's MTDC market fares in attracting their business. Area providers, although perhaps not building speculatively, are definitely positive about the city's outlook and long-term viability.

This TBI report provides current supply-demand and utilization trends in Colorado, as well as market-specific analysis. It also highlights prominent MTDC providers in Denver and provides a market outlook for each. Our intended audience includes:

  • Datacenter providers assessing market share, market positions and expansion opportunities.
  • Datacenter providers and telecommunications companies in other regions considering expanding to, or in, Colorado.
  • Hosting and cloud providers considering datacenter leasing decisions and expanding to, or in, Colorado.
  • Financial professionals considering investments in datacenter properties and companies.
  • Real estate and planning professionals interested in a Colorado datacenter market analysis and provider-by-provider analysis of the MTDC space.

In our new 2017 report about the MTDC market in Colorado, we offer a look at those markets, as well as a new 451 Research Market Map of the competitors in the area. In this report, MTDCs are considered multi-customer colocation and wholesale facilities. Single-user enterprise datacenters and single-tenant datacenters are specifically excluded from this analysis, with a few exceptions where knowledge of the datacenter placements adds color to the overall market.

Some of the report's key findings include:

  • Denver benefits from local and regional demand, with all the big-name providers catering to both. Local demand comes from a strong business mix in the city, complemented by startup communities in Denver and Boulder. Regional demand centers on the long-haul connectivity that passes through the downtown area of Denver, combined with relatively low power prices, taxes and land prices when compared to more westerly markets.

  • Denver's status as a destination city has previously attracted an impressive population of talented IT people to the region, as well as a good number of enterprise datacenters. Many local providers are eyeing these now-aging datacenters as business opportunities, trying to attract their owners to colocation and cloud consolidation models. One key challenge, however, is that while a company's IT staff may reside in Colorado, the leadership may well be at corporate headquarters in another state.

  • Presently, large-scale wholesale deals seem to be passing over Denver in favor of Phoenix and Las Vegas, despite Denver having a better climate and generally lower prices than its neighbors to the west. For this to improve, Denver (and the rest of Colorado) needs two key ingredients: space and incentives. H5 is currently the only wholesale provider with sizable amounts of space online, but this will be changing in the near future, with CoreSite bringing space online later this year and EdgeConneX taking a new facility online in 2019.

  • Supply remains healthy in Denver, and several providers are currently working to add capacity. Beyond the builds and expansions, providers seem to be either doubling down on the market as a whole or exiting. Equinix increased its capacity in the city more than five times with its acquisition of Verizon's datacenter assets, Iron Mountain recently entered the market by purchasing FORTRUST, Massive Networks developed its capacity in the market through the acquisition of RockyNet, and Zayo Group just added capacity by acquiring Stream Data Centers' facility in Denver.

  • While perhaps interesting from a political and socioeconomic perspective, Colorado's legalized marijuana industry has yet to make any recognizable impact on the datacenter market. There is, however, a group of tech startups that have sprung up in support of the industry, so it's at least feasible that these businesses will leverage local colocation at some point. The marijuana industry has had the interesting side effect of providing some competition for brownfield building opportunities and datacenter employees.

451 Research would like to thank all the datacenter providers that contributed information for this report and supported our tours of datacenters across Colorado. Please contact your 451 Research account manager for more information about this new 25-page report.

Dan Thompson

Senior Analyst

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