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THE GLOBAL, MULTI-TENANT DATA CENTER MARKET

Dating back 20 years ago, the enterprise user owned and operated their own data center and located these
mission critical facilities either on-site or within close proximity to their primary business office(s). Since the
turn of the century, the trend has been shifting away from companies internalizing their data center functions,
to outsourcing to third-party, multi-tenant data center (“MTDC”) providers. While the market’s propensity to
outsource IT changes on a sheer volume-basis with the times, it’s steady, upward trend has remained
constant.

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In 2017, the total number of data centers around the globe peaked at 8.6 million . Starting in 2018, this
number is projected to begin a decline as companies of all sizes vacate their own dated, capital-intensive data
centers and transition into a more “OpEx” mindset by outsourcing IT to the industry’s subject matter experts --
the MTDC providers. The above-mentioned decline is not indicative that the MTDC industry is in jeopardy; to
the contrary, over the past 5-years the total amount of data center space has added over 360.0 million SF in
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an attempt to correct the economic imbalance (with demand exceeding supply) that exists in the market
today, and the majority of this space is from MTDC providers .
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Gartner Research, a leading data center research and publications firm, refers to today’s data center market
as the “Cloud Era”. Cloud services have experienced wide scale adoption across every industry, steadily
evolving into an integral part of all IT strategies . Absorption rates across global markets have reached record
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highs, and this trend is expected to continue through 2020 as major cloud providers are scheduled to triple
their infrastructure investments . The latest market outlook (December 2017) from Research and Markets
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agrees with Gartner, stating that rising usage of cloud computing in recent years and relatively low capital
required for data center colocation are key factors driving market growth . They report that the global data
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center colocation market was $29.8 billion as of year-end 2016, and will reach $76.37 billion by 2022, growing
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at a CAGR of 17.0% from 2016 to 2022 and predict that high absorption rates in the coming years will
continue to fuel data center supply.