Collocation Buyers Are In For Sticker Shock

Longtime collocation hosting clients with expiring contracts are finding significantly higher prices in an environment where power requirements can trump space requirements — a far cry from the situation when they signed their contracts three or more years ago. Several Forrester clients have recently expressed dismay at the new dynamic in which suppliers have regained the upper hand, particularly in high-demand geographies where high occupancy rates allow suppliers to choose clients with the best prospect of yielding maximum revenues per unit of floor space. Moreover, in many cases the equation has shifted from space to power, in which power requirements dictate space requirements rather than the other way around. Sourcing and vendor management professionals must adjust to a new reality in which collocation services are rapidly rising in price, particularly with large suppliers in high-demand geographies.