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Market Highlight: Los Angeles' Colocation Ecosystem

The United States of America is a technology powerhouse, home to the famous Silicon Valley and a major base of operations for hundreds of global IT firms.Self-proclaimed as “the most advanced software and IT services industry in the world”, the United States contributes more than a quarter of the $3.8 trillion the global IT market generates every year. In fact, nine of the top 10 software companies (based on revenue) are headquartered in the United States*.The United States is well connected to Europe and the Asia Pacific via multiple subsea cables, with the country hosting over 120 million fixed line telephone subscriptions and over 380 million mobile phone subscriptions.With a staggering 2,187 data centers, 1,969 cloud service providers and 51 network fabrics, the US is the world's largest data center market. It dwarfs the second largest data center market, the United Kingdom, which is home to just 414 facilities and 735 service providers.It's no surprise then that in Cloudscene’s 2017 Global Top 10 Colocation Ecosystems ranking, half the list was dominated by US cities. Determined base on both size and connectivity, the digital super-city of Los Angeles came in at #7.Several major trans-pacific submarine cables have emerged in Southern California, making Los Angeles a prime hub for high-speed interconnection between the USA and the Asia Pacific. Average international latencies include 110ms from LA to Tokyo, 158ms to Sydney, 162ms to Hong Kong and 177ms to Singapore.Despite being California’s commercial hub and a critical West Coast trading gateway, the cost of power is a significant challenge reported by local tech firms. The region’s antiquated electricity grid is managed by the Los Angeles Department of Water and Power, and in some areas, the transmission lines and substations are decades old. Political factors are also said to cause supply restrictions resulting in power costs in California to be 50% higher than the national average.As a result, many data center operators opt to establish their facilities in LA suburbs such as El Segundo, where LADWP is not the incumbent provider.Nevertheless, downtown LA is host to a strong and growing data center industry, and some of the world’s most resilient and technologically advanced facilities are based in the city.JLL’s 2017 LA Data Center Outlook indicates that demand for fast and reliable content delivery is driving keen interest in the LA market, as local providers recognize the need to be located close to their clients. Total data center inventory in LA sits at 2.3 million square feet with 210 megawatts of capacity, and is growing at roughly 3MW per annum. CoreSite, Equinix and Digital Realty currently dominate the market.The Los Angeles data center sector is an important economic force, particularly within the central business district and to the southeast. The city has an impressive 91 data centers, 415 service providers and 10 network fabrics including Megaport, Equinix IX, Digital Reality IX and CoreSite Any2.Cloudscene’s ranking tool provides further insight into the major players in Los Angeles. The ecosystem-style ranking is unique to Cloudscene and is calculated based on the number of known service providers and PoPs at each location.CoreSite’s LA1 facility leads the market with 274 service providers, compared to second-place Equinix LA1 with 123 service providers. Digital Realty, Telehouse, Net Data Centers, Zayo and Latisys round out the remainder of the top 10.Top 10 Los Angeles Data Centers

  1. LA1 (One Wilshire) - CoreSite
  2. LA1 - Equinix
  3. 600 W. 7th Street - Digital Realty
  4. LA2 - CoreSite
  5. Los Angeles Center - Telehouse
  6. LA2 - Equinix
  7. LA3 - Equinix
  8. LAX 6 - Net Data Centers
  9. 17400 Von Karman Ave - Zayo
  10. OC1 - Latisys

JLL has indicated that the West Coast of the US is set to benefit from a surge in demand as APAC markets increasingly tap into US-based apps, web retailing and content delivery. Furthermore, JLL believes a new wave of Chinese telecoms companies are set to establish facilities in California, as they target Chinese customers wishing to gain a foothold in the USA.Earlier this year, Zayo announced it would expand its data center footprint in Los Angeles by establishing a presence in the One Wilshire Building (known as LA1). The huge colocation operator attributed the major decision to "strong customer demand" and a new agreement "with a major webscale company". A critical point of connectivity between North America and the Asia Pacific, the One Wilshire Building is deemed one of the most interconnected buildings in the world.IaaS provider, Voxility, revealed just a month later that it too would expand its current presence in the LA market with deployments in CoreSite's LA campus (as well as in Northern Virginia). Voxility stated in its press announcement that the move would give its customers "high-performance connectivity and meaningful latency improvements."Last month, Hivelocity boosted its LA presence with the acquisition of Rack Alley, both colocation, dedicated servers and cloud hosting companies. The acquisition will see Hivelocity take ownership of two LA facilities which are just meters from each other. Hivelocity's VP of Colocation, Rick Nicholas, said the decision was the result of a survey of its customer base where "LA was high on their list of places they wanted us to expand to".It’s clear that Los Angeles is rapidly establishing itself as one of the world’s most important data center hubs, and the market is showing no signs of slowing down.To learn more about the Los Angeles' data center market, take a look at the LA market page on Cloudscene. Interested in finding out more on our 500+ other markets? Search Cloudscene*According to PWC Global

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