Will Silicon Valley Run Out of Data Center Space?

1sockchuck writes "With capital scarce, data center developers are prioritizing projects in northern Virginia, where the Obama stimulus plan and federal shift to cloud computing are likely to boost data center demand from government agencies. This is forcing them to delay or scale back large projects in Santa Clara, setting the stage for a supply/demand imbalance in Silicon Valley, particularly for large space requirements. One potential mitigating factor: some currently occupied data center space could become available through the failure of venture-backed startups."

Comments

dream on

[Anonymous Coward]

There is a TON of unused data center space in the bay area, as dotcoms have folded up or moved.

Re:dream on

[cantcomplain]

You may be partially right--some of the facilities have space. But some that have "tons" of space are maxed out or near it for power and cooling. Some are not accepting new clients or anticipate turning away business in the next few months. I think it was 365 Main that turned me away and said the move to the cloud would be consuming their capacity. Some of the tenants at 200 Paul have space but some of it is pretty ghetto and limited by power. At least that's what I found in a cursory search dictated by a ceo that doesn't want to build out a server room (40kva w/10 tons hvac) at a new site. If you know cheap and usable co-lo space, all the sushi you can eat!

I say DIG

[Fluffeh]

I think we should start building hardened data center sites miles underground! And have like nukes defending them! And there should be these huge walls that don't allow anyone in or out! And guard dogs!

Sorry, for a moment there, I thought we were still in a cold war.

Maybe they could just move them next door to the next valley? I am sure there are plenty of nice valleys around that are just waiting to take all the required new data centers. Maybe snap up some bargain land from those plummeting subprime land prices?

Re:I say DIG

[Anonymous Coward]

Case in Point

World's most secure data center

This underground data center has greenhouses, waterfalls, German submarine engines, simulated daylight and can withstand a hit from a hydrogen bomb. It looks like the secret HQ of a James Bond villain.

And it is real. It is a newly opened high-security data center run by one of Swedenâ(TM)s largest ISPs, located in an old nuclear bunker deep below the bedrock of Stockholm city, sealed off from the world by entrance doors 40 cm thick (almost 16 inches).

Re:I say DIG

[tcopeland]

> there are plenty of sites available [missilebases.com]
> to build your own hardened data center.

You'll need to watch for deep crows, though.

Not even possible

[Brian Gordon]

a supply/demand imbalance

If there's demand, someone will supply it. If the demand is for unrealistically cheap service, then that's not real demand.

Re:misspelling in title

[mhh5]

Perhaps it wasn't a typo... but a snide remark. Silly-con -> Sillicon

No more startups

[Kohath]

No, it won't be a problem.

There will be very, very few new startups in the US. And many of the existing startups will shut down. There's just not much point in starting a business in the US any more.

- IPOs used to be plentiful, but that was before Sarbanes-Oxley made going public astronomically expensive.
- The government is sucking up most of the country's available capital [to buy votes] for stimulus and other government spending, leaving less available for business growth.
- The new stock option rules more-or-less preclude giving lower-level employees company stock so they share in the success of the company.
- Even for those that do see success, the tax rate will be 60-70% in a few years, so they won't be able to keep much of what they make. They won't be able invest the money in new startups because the taxes will take too much and there will be none left over.
- And don't forget that everyone knows businesses are villains and rich businessmen are hated. Why subject yourself to all that for such low after-tax gains?

See this article by Victor Davis Hanson.
See this article by T. J. Rodgers of Cypress Semiconductor.
See this article by Michael S. Malone.

It's not really the land of opportunity any more -- not unless you know just the right people in government or the environmental industrial complex to steer you an earmark. And even those will run out in a few years after all the money is spent and all the output from the country's slowly-declining future production is borrowed and spent.

There will be plenty of vacant data center space.

Re:No more startups

[YesIAmAScript]

Gloom and doom never gets old. We were definitely doomed in 2000 also. And 1994.

I don't think Sarbanes-Oxley has anything to do with the number of IPOs. IPOs are such a ridiculous money making scam that increasing the overhead a few percent isn't doing to dampen anything. I'd say the reduction in the number of IPOs is more to do with the stock market in the toilet than anything. Companies don't go public to succeed anymore, they go public to get a huge stock pop, and you won't get that right now.
You're right about the changes in stock options to low-level employees, but my understanding is there are no new rules, companies are voluntarily expensing stock options now. Which, to be honest, they should have done all along.
The tax rate will be 60%? Marginal tax rates aren't even at 30% for most people right now. Remember, it's Silicon Valley, your house costs $600,000 and the tax on the interest is deductible. I know people with 14 exemptions on their W-4, virtually all of which come from them paying $28,000 in interest on their house each year. That means if you're making $100,000, 28% of your income isn't subject or state or local taxes at all!

- And don't forget that everyone knows businesses are villains and rich businessmen are hated. Why subject yourself to all that for such low after-tax gains?

Good point, now what are you going to do with your business degree? I'd be lying if I said I was disappointed that your ilk might no longer be rushing to Silicon Valley to make their money for nothing but calling themselves executives and quoting tax regulations.

Unfortunately

[gtrubetskoy]

There are only two places in the US where datacenters can be built - Silicon Valley and Northern Virginia.

Agreed

[symbolset]

With improved density current installation needs should be met forever even without folding .coms.

More importantly, the datacenter should locate somewhere with cheap power, labor and real estate that has good fiber. Where in the world it is is irrelevant - people who run servers don't fondle the hardware any more.

Re:Agreed

[kriston]

Northern VA doesn't have cheap power, definitely does not have cheap real estate, but we do have lots of good fiber. You can't mow your lawn without breaking some.
The vacancy is horrendous. I work in a virtually abandoned office building (upper four floors completely vacant) and pass 20 other empty offices on my way to work, not to mention the data centers that America Online abandoned even before they were brought online.

Re:Agreed

[Samgilljoy]

I had a vision once of server farming becoming a family tradition among people in certain parts of the world, replacing agriculture.

Server farmer's almanac? heh heh

Who cares where the data center is?

[schwep]

Just put in a fat pipe to the data center & connect it to the backbone. Data centers are (by design) a commodity, and as such will be outsourced to where it makes sense.

Re:Half-empty dc's

[drdanny_orig]

I live and work in Sunnyvale, and I'm here to tell you that half the office space in this area is empty. Buildings that started going up two years ago have stopped, rusting in place. And at the rate people and businesses are leaving I don't think space is going to be a problem.

Why...

[QuietLagoon]

... do the data centers need to be located in Silicon Valley? I thought this thing called The Internet negated the need for geographical co-location.