Have you tried booking datacentre space recently? If so, you'll know just how prices have risen - and there doesn't appear to be any end to it. Finding space for those new servers - or more importantly, finding somewhere that can supply enough power for them - is getting harder in a hurry.

After five or so years of relative stability - or flatlining, as The Colocation Exchange founder Tim Anker put it - the price of colocation has rocketed.

"We saw a lot of growth in datacentre space in 1999-2002 with London growing from two facilities to 15 in that period. Available space went up tenfold to 1.5m sq.ft but then flatlined until March '06 - nothing was built in that period, and some sites even disappeared as operators went bust," says Anker.

But that's all changed. The last year or so has seen demand rocket. According to Anthony Foy, group MD of colocation provider Interxion, a number of changes have combined to create this situation. Demand has gone up, driven by business change and by regulatory pressures, and there's now a shortage of space.

"You have companies which are moving from client-server to web-based applications, and they're virtualising mission critical applications, moving them into higher quality datacentres.

"Also there's a general hardware refresh going on, so companies are buying high density routers, servers and switches as older equipment comes to the end of its lifecycle, following the Y2K panic buying spree. The most efficient servers are pizza boxes or blades and they all have narrow tolerances of heat and humidity - this is also true of switches and routers. There's also a shortage of people who can provide datacentre services.

"Then there are government regulations that require organisations to comply with the International Financial Reporting Standards (IFRS), Sarbanes Oxley, Basle II and data protection," Foy says.

From a UK perspective, things are even more acute than elsewhere in Europe. UK companies are over twice as liable to colocate than their European counterparts, according to an Interxion-commissioned report conducted by IDC. The research company's analysis, entitled "Helping a Market under Siege," reports that the UK has both the highest available floor space per datacentre in Europe, with more than double the number of racks per facility, and that both are projected to increase by around ten percent over the next year. UK datacentres use more power and house the most blade servers too.

Despite that level of density, demand exceeds supply in Europe by a margin as high as six to one, according to Foy. In the UK, things can only be even more intense. "It's a very tight market," agrees Anker.

In terms of future growth, both Foy and Anker are in agreement. The limiting factor is power -- the amount of energy a data centre can consume, and whether the power utility is capable of supplying those needs. "Some data centres have millions of CPUs," says Foy.

Anker reckons the shortage of data centre space is unlikely to be resolved anytime soon. "In London and the south-east in particular, there's a shortage of grid capacity, with the building work for the forthcoming Olympics adding further pressure. While there are old factories elsewhere in the country, there are limitations on their use for new facilities. For example, many data replication techniques require that data centres be no more than 100 km apart, thus limiting how far from London we can go."

The consequence of all this is that prices for colocation space are rising at between 10 to 20 percent annually, according to Foy - and that's after some huge rises over the last couple of years. "I see no end to demand for two to three years because of ongoing IT refresh. It is to come extent a real estate issue as they're not making any more land, and regulations and taxes will force people to consider energy efficiency," says Foy.

He reckons his company is building €90 million on new facilities, with 30,000 square feet of new space due to be added over the next two years - about a 50 percent expansion.

"If super returns are being made, people should be attracted into the sector. But the barriers are finding the right sites with power, plus the cost of build. The prices of basic commodities such as copper and steel are going up at the same time that specifications are as well, for example most new facilities will offer twice as much power per footprint as those built seven years ago," says Anker.

This is not a rosy picture. Prices are soaring, the amount of available space in densely-populated Europe is not as great as is desirable from a datacentre manager's point of view, and planning regulations reduce available space even further.

In terms of remedies, Foy's prescription is traditional. "IT managers need to maximise the efficiency and layout of the datacentre. There are simple designs and approaches to minimise costs such as cold/hot aisles - outsource to a third party who specialises in nothing but datacentres."

Anker thinks along a similar track. "IT managers need to plan ahead and analyse their power needs. They need to look at the equipment and ask if they can get away with using less power. They could use more virtualisation, though that doesn't work well for small users in isolation where renting virtual servers may be the better way forward."

Another alternative is to build your own datacentre - an option to which many companies are increasingly turning, according to IDC's research. This is however costly and only the biggest companies are likely to be able to afford to build the sort of large scale facilities to the same levels of redundancy that we have seen in the past; according to Anker, as a high quality datacentre needs to be of the order of 10,000 sq. feet to keep build costs per foot viable.

So the message isn't optimistic - unless you're a provider like Interxion. As an independent facilities negotiator, Anker reckons: "Right now it's not looking too promising. The digital revolution has huge momentum and that trend won't change. We think this represents a huge challenge for the IT industry as a whole."