The pressing shortage of suitable data centre space in large metropolitan areas is increasing the appeal of co-location providers. And that is likely to lead to hyper-inflation in the market, says market watcher IDC.

IDC predicts that prices for co-location will increase at around 20% a year, through to 2011. It bases that estimate on a review of data centre strategies at 834 European enterprises, which confirms that demand is set to increase in coming years.

The study found that 20% of UK data centre operators are planning to begin using co-location services within the next 12 months. Meanwhile, 36% are planning to open a new data centre in the same time period â“ increasing the likely competition for suitable space.

The UK is the most mature market for collocation, where the providers are well established, charging models are most sophisticated and the barriers to entry â“ which minimise the likelihood of new entrants sparking a price war â“ are the highest.

Concerns around the availability of power are starting to bite: According to the study, companies wishing to run facilities with an above average power consumption are more likely to outsource to a co-location service provider, as are those who require high availability.