Not so Fast: Concerns About the Future of the Data Center Market

NEW YORK, New York – The most common concerns for the future of the data center market tend to be macro – people are concerned about when the market will bust, how it’s only a matter of time, and how Trump will shake things up. However, some industry insiders are pointing to internal fissures as the biggest cause for concern. According to Aaron Sawchuck, Co-Founder, of ColoSpace, Inc., we should be looking at expectations. He’s concerned about the time horizons investors are looking at. “The old private equity/new market playbook was: put a bunch of money in, spend 3-5 years buying up as many assets as you can, cobble them together, rebrand it, then flip it to a large private equity fan. As we see investors with a longer time horizon [not only] picking up prices, but also making that playbook of the quick roll up more difficult, asset prices have risen.” Sawchuck says that opportunities for multiple arbitrage are not there as much. “While this is an industry that screams for consolidation and I’d love to be a consolidator, the asset prices are choosing to be a real challenge.” Until that mismatch between those smaller assets and disparate markets -- unless seller expectations change – Sawchuck doesn’t see the deal volume that he thinks should be taking place in the market. Another salient issue is that of asset quality. As Chris Elliott, Principal, CS Technology, Inc, says,  “Let the…