Saturation in the London data center market is on the verge of creating a new second tier market of UK data centers, predicts CB Richard Ellis in its European Technical Real Estate Bulletin. For corporate governance reasons, banking institutions need to be able to synchronously replicate their data, meaning that the processing of trades must happen practically in real time. As a result, the maximum distance a banking institution's data center can be from its offices is around 60km. Data centers within this range, assumed to be within 60km of the City and Docklands, can be said to be within the "Replication Market.
However, a shortage of supply in the London market could lead to the development of a two-tier marketplace with data centers being located inside or outside the Replication Market. End users are likely to become more creative in their approach to procurement, perhaps splitting their requirements between IT platforms that need to replicate (front office trading platforms) and the more process-driven elements that may be housed further afield.
A price differential is likely between tier one and tier two, as end-users are likely to seek lower specifications for the secondary locations.
Stephen Taylor, associate director in CB Richard Ellis's Global Corporate Services team, says, "Within the Tier II market, occupiers will be product driven rather than location driven. As such, flexible sites with sufficient power and appropriate planning underpinned by credible operators are likely to compete for requirements not needing to synchronously replicate back to the City & Docklands.