That’s the overall conclusion of the latest quarterly (Q3 2009/July-August-September) European Data Centers report by CB Richard Ellis (CBRE), the group that has monitored the worldwide Carrier Neutral Hotel (CNH) marketplace since 1999.

“I’d love to say we’ve seen green shoots of recovery with these results – but the fact is the market is still at the lowest point of the demand cycle,” Andrew Jay, Head of the CBRE Technology Practice Group, told DCD Focus.

CBRE researchers say that while take up across the top five tier 1 data center markets (London, Paris, Frankfurt, Amsterdam and Madrid) for last summer did see an up-tick – an increase of 730 sq m to 18,190 sq m – that was in the context of very sluggish growth in the first six months of the year.

And though both the retail and wholesale colocation markets have continued to show encouraging levels of growth, again, this is to be seen as turning 2009 into what Jay dubs a “disappointing” instead of a “disastrous” period for the industry.

Thus, wholesale colocation take-up for Q3 was 13,080 sq m, the strongest quarter results so far in the whole of 2009 and an increase quarter-on-quarter of 12,380 sq m.

Overall, CNH (Carrier Neutral Hotel Stock, or data centers where the operator allows any carrier to connect into the facility and to connect to third parties within the facility, not discriminating between different carriers and charging only nominal fees for interconnection) market vacancy increased marginally to 23.7%: the fully-fitted vacancy rate for the three month period in question thus stands at 10.9% and the shell and core vacancy rate at 56%.

“We did see on a localised basis some improvements in London and Frankfurt,” he adds. He attributes the former growth to occupancy rates up on poor Q1 and Q2 results, while Frankfurt saw – in what some veterans of the market may find notable – the end of the last bit of ‘dot com surplus’ being finally utilised in the city, with Equinix’s $30m purchase of what had been a former Exodus facility.

CBRE will be reporting on the 2009 state of the market as a whole when it finalises analysis of the Q4 (October-November- December) figures, now being sifted.

The report also flags up the possible negative impact in the UK on this relatively depressed market of the implementation of the CRC Energy Efficiency Scheme. This is a mandatory climate change energy saving scheme, earmarked to commence in April and likely to have significant but as yet unclear repercussions for the industry.

“The main objective of the scheme is to provide financial incentives to reduce energy use by putting a price on carbon emissions,” Jay points out.

“Organisations are eligible for the CRC if their UK total half hourly electrical consumption exceeded 6,000MWh for 2008. But as the average data center could consume 10 times more than this, the scheme will of course have a huge effect on the data center market.”

Still, the overall conclusion of CBRE on the market, pre any impact of CRC, is that the first signs of recovery are finally evident with an increase in take-up across all sectors as seen above and the team expects this will continue to grow steadily.

“The predicted growth in take-up is representative of the corporate market emerging from the short-term buffer created by a combination of limited IT budgets, headcount reduction and virtualisation. This has helped fuel retail collocation take-up this year as organisations have opted for shortterm, tactical OPEX solutions.

“As this dynamic is unlocked by a wider economic recovery and businesses start to grow, so we can expect to see increased take-up across all sectors,” Jay believes.

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Keywords: European, data center market, London, Frankfurt, CBRE, Carrier Neutral Hotel, CNH, collocation, Equinix, Exodus, Energy Efficiency, carbon emissions, electrical consumption, virtualisation