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"I really think there's a strong opportunity for quality installations," said Jim Quinn of Cushman & Wakefield. "But a lot of the inventory that's been added to the market is not quality inventory. The people out there with a vacant buildings with some power and fiber are in for a difficult time."
While premier facilities in fiber-rich markets are drawing the most interest, the sheer volume of available facilities has buyers actively sizing up deals at all levels of the market.
Among those shopping is BJK Investments, which last year bought 22 former COLO.COM data centers for about 10 cents on the dollar at a bankruptcy auction.
"We're looking at a handful of great opportunities," said Chris Harman, director of real estate and finance at BJK. "We've really been amazed by the opportunities we're seeing, and we're looking at a lot of data centers. Our focus is some of the distressed situations, and we are looking at regional plays."
"There are a lot of very intriguing speculations," noted Tony Wanger, a partner in Sterling Realty Partners. "If you're wholesaling lemonade and you buy lemonade at 10 cents on the dollar and your competitor pays the full dollar, it makes for some interesting possibilities."
The challenge, Wanger noted, is finding lenders or investors willing to finance those kind of deals. Scott McCormack, vice president of BancBoston Capital, concurred.
"There aren't going to be a lot of private equity firms investing in this market," said McCormack. "No one's made money yet. Until someone's profitable and has paid off the debt, lenders aren't going to be interested. It's the customers that are interesting to acquirers today."
They're interesting to landlords as well, many of whom are focused not on expansion but on managing the dickens out of their existing franchise.
"Right now, there aren't a lot of fancy concepts out there," said Paul Pariser, a principal in Taconic Investment Partners, which operates 111 Eighth Avenue, one of the premier carrier hotels in New York. "I think the strong will get stronger and the weak will die. Ultimately the franchise assets in each city will consolidate their strength. This will take a few years.
"Right now, it's really caring for your assets," said Pariser. "Love thy tenants."

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