Valuing Facilities

So if two profitable colocation facilities in St. Louis totaling 500,000 square feet are worth $22 million ... what does that say about the value of the data center you're trying to buy or sell?

After months of inactivity, people are talking deals again. That's probably a sign that the many players who have been waiting to buy at the bottom of the market have decided that this is close enough.

Which brings us to the question of valuation. There have only been a few sales of carrier hotel and data center properties, and these transactions don't always serve as effective apples-to-apples comparisons.

The Pinnacle deal was unusual in one respect - the buildings had a significant number of customers, and between them were actually in the black, making $700,000 for the most recent quarter. Most folks today want to sell the money-losing empty facilities, rather than the profitable ones containing customers.

When you consider the $56 million it spend to buy the properties, Pinnacle still made just 39 cents on the dollar. The other major deal this year saw BJK purchase 22 former COLO.COM sites for a reported $54 million in a bankruptcy auction.

What are your yardsticks for valuing a building? What have we learned from the deals that have been concluded thus far, and what do they tell us about what lies ahead? Add your thoughts below.