L.A. Data Center Demand 'Low' Compared to Major Metros

Data center demand in L.A. pales in comparison to other markets, and according to a new report from JLL, merger and acquisition activity for data centers is high, but is having minimal affect on the L.A. market. That may be changing. Demand is slowly beginning to increase and Asian companies are looking to establish a footprint in the L.A. market. To find out more about how the L.A. market stacks up against the rest of the country, and what this activity means for users and providers, we sat down with Darren Eades, an EVP at JLL, for an exclusive interview.

GlobeSt.com: What is data center demand like in L.A., and why is demand surging now? 

Darren Eades: Demand in L.A. is relatively low compared to other major data center markets around the country, however we are definitely seeing an increase in activity. Many colocation providers are increasing their service offerings and diversifying their practice thus encouraging companies to reevaluate how they use their current data center footprint. As many companies push to the cloud, providers need to be ultra-competitive with pricing and creative with additional services.

GlobeSt.com: What industries are driving most of the demand? 

Eades: The majority of demand is from the tech and media industry but other traditional companies in the financial and healthcare sector continue to seek alternatives.

GlobeSt.com: Are you seeing more foreign companies enter the market and drive demand? If so, where are these companies from, and why are they expanding now? 

Eades: There has been a surge of Asian companies looking to establish a presence or increase their footprint in L.A. The majority of the Asian companies seeking space are in the telecom, tech and content delivery business.
GlobeSt.com: Your report shows tremendous M&A activity in North America. What is it like in L.A. specifically?

Eades: M&A continues to be the major new headline across the country however it currently has little effect on the L.A. market.  Few of the major mergers have a significant presence or duplicity of sites in the market.  We continue to see more M&A that will potentially create scenarios where companies need to decide if they will continue to need all of their locations in the market, increase their presence or look to consolidate.

GlobeSt.com: What does this activity mean for both users and providers? 

Eades: I think the M&A will allow many of the small players an opportunity to deliver more customize solutions and better customer service as the bigger players work through their merger woes.  We will see a lot of the local service providers take advantage of the bigger players taking their eye off the ball and pick up some critical business allowing them to grow and compete.

Data center demand in L.A. pales in comparison to other markets, and according to a new report from JLL, merger and acquisition activity for data centers is high, but is having minimal affect on the L.A. market. That may be changing. Demand is slowly beginning to increase and Asian companies are looking to establish a footprint in the L.A. market. To find out more about how the L.A. market stacks up against the rest of the country, and what this activity means for users and providers, we sat down with Darren Eades, an EVP at JLL, for an exclusive interview.

GlobeSt.com: What is data center demand like in L.A., and why is demand surging now? 

Darren Eades: Demand in L.A. is relatively low compared to other major data center markets around the country, however we are definitely seeing an increase in activity. Many colocation providers are increasing their service offerings and diversifying their practice thus encouraging companies to reevaluate how they use their current data center footprint. As many companies push to the cloud, providers need to be ultra-competitive with pricing and creative with additional services.

GlobeSt.com: What industries are driving most of the demand? 

Eades: The majority of demand is from the tech and media industry but other traditional companies in the financial and healthcare sector continue to seek alternatives.

GlobeSt.com: Are you seeing more foreign companies enter the market and drive demand? If so, where are these companies from, and why are they expanding now? 

Eades: There has been a surge of Asian companies looking to establish a presence or increase their footprint in L.A. The majority of the Asian companies seeking space are in the telecom, tech and content delivery business.
GlobeSt.com: Your report shows tremendous M&A activity in North America. What is it like in L.A. specifically?

Eades: M&A continues to be the major new headline across the country however it currently has little effect on the L.A. market.  Few of the major mergers have a significant presence or duplicity of sites in the market.  We continue to see more M&A that will potentially create scenarios where companies need to decide if they will continue to need all of their locations in the market, increase their presence or look to consolidate.

GlobeSt.com: What does this activity mean for both users and providers? 

Eades: I think the M&A will allow many of the small players an opportunity to deliver more customize solutions and better customer service as the bigger players work through their merger woes.  We will see a lot of the local service providers take advantage of the bigger players taking their eye off the ball and pick up some critical business allowing them to grow and compete.