Australia\u2019s largest data centre [DC] operator Equinix has declared Melbourne the fastest growing edge metro in the world at a 45% CAGR to reach 102 Tbps by 2026, up from 35 Tbps in 2023. Tbps represents a measure of interconnection bandwidth used in the company\u2019s latest Global Interconnection Index 2024. <\/p>\n\n\n\n
While the Sydney DC market is on a different scale \u2013 the largest metro in the Asia-Pacific region for professional services, consumer services and industrial services interconnection bandwidth, and the second largest for telecom and cloud and IT services bandwidth and already at 485 Tbps interconnection last year \u2013 Equinix Australia managing director Guy Danskine believes Melbourne\u2019s time has come. \u201cAfter AWS\u2019s arrival\u2026Melbourne now has its own full [big four] cloud market,\u201d he said, adding that Equinix saw early on that customers don\u2019t want to be transferring their traffic in and out of Sydney to access carriers or cloud providers. <\/p>\n\n\n\n
The hyperscale cloud providers have expanded aggressively in the city over the last two years as cloud adoption accelerates, and Danskine said Equinix is currently the only AWS partner that can offer Direct Connect up to 100G in Melbourne, which is proving attractive to customers wanting to boost connectivity. <\/p>\n\n\n\n
As a result, the DC operator is seeing some different customer profiles compared to Sydney. \u201c[There\u2019s] a lot of research and development going on\u2026very strong universities and we\u2019re seeing that manifest in some exciting health tech organisations,\u201d said Danskine. \u201cQuantum computing is certainly emerging as a strength for Melbourne and financial services \u2013 there\u2019s so many of the banks based there.\u201d As a result, he said, \u201cit does bring some really interesting industries forward in terms of who\u2019s looking to connect to each other in Melbourne.\u201d<\/p>\n\n\n\n
Equinix has its adjacent ME1 and ME2 IBX data centres in the Port Melbourne area and the latter DC connects to its ME4 site in Derrimut, about 19km away. Danskine said ME4 provides good physical redundancy for customers. Its ME5 DC is in the city. He revealed that ME2\u2019s expansion is already underway, with news about that development coming later this year. \u201cWe\u2019re continuing to invest tens of millions of dollars and expanding that market,\u201d he said. <\/p>\n\n\n\n
Comparing Australia\u2019s two biggest markets<\/strong><\/p>\n\n\n\n Sydney is a much bigger DC market than Melbourne with colo spend of US$1.53bn versus US$684m according to Structure Research. With 54 operational DCs, a further three in development and a 12 DC land bank, it is an order of magnitude higher than Melbourne\u2019s 32 DCs, a further two in development and a 5 DC land bank.<\/p>\n\n\n\n However, Structure\u2019s data shows Melbourne outstripping Sydney\u2019s market growth (18% vs 16% 5-year CAGR to 2028). This will see Melbourne grow from US$684m to US$1.47bn by 2028.<\/p>\n\n\n\n According to Structure Research\u2019s \u201cAustralia (Sydney & Melbourne) DCI Report 2023\u201d, the city has a slight edge on price of power per kWh (8-13 cents versus Sydney\u2019s 9-14 cents) meaning Melbourne hits an average per density of 5.9 kW\/rack versus Sydney\u2019s 5.6 kW\/rack. Average colo pricing is similar in both cities from enterprise to retail, although Sydney shades Melbourne on hyperscale pricing. <\/p>\n\n\n\n \u201cThe Melbourne colocation market now stands at 218MW of currently built out capacity in 2023 with 84MW of data centre capacity currently under development and over 190MW of capacity classified as land banks given the campus style data centre build configurations that is becoming more prevalent across the northern and western Melbourne sub regions,\u201d said Structure Research\u2019s head of research Jabez Tan. <\/p>\n\n\n\n While central Melbourne including the Port area holds most data centres, western Melbourne is seeing growth in Deer Park\/Derrimut and Truganina, while Tullamarine in the north is also a place that will be on the expansion agenda of DC operators. In the east, the city has six DCs but these are dispersed. <\/p>\n\n\n\n DCByte\u2019s latest tracking figures show Melbourne sitting on 205.5MW of live DC capacity but interestingly, there is a further 499MW of committed capacity meaning it has the required elements (government, land, power, and so on) secured, or it will be developed by an operator with a strong and reliable track record. Adding that to 71MW under construction and a further 216MW at \u201cearly stage\u201d development \u2013 which may not holding all of the approvals or funding as yet \u2013 and Melbourne\u2019s DC capacity is heading towards 991.5MW.<\/p>\n\n\n\n Hyperscalers are self-building almost immediately in Melbourne, in contrast to the colo-first approach they adopted in Sydney said DCByte research analyst Teresa Tan. She pointed to CDC\u2019s imminent 150MW arrival in Brooklyn, West Melbourne, as a sign that government demand is also growing. \u201cPort Melbourne area is also strategically quite near one of the emerging West DC clusters, providing good connectivity options,\u201d she said.<\/p>\n\n\n\n According to DCByte, Sydney represents about 60-65% of the total Australian DC market with Melbourne around 20-25%. Despite the difference in size, Tan said the demand profiles of the cities are fairly similar, particularly in the scale of enterprises seeking DC services. She pointed to Next DC\u2019s M2 (60MW-to-100MW), M3 (150MW) and soon M4 (80W), Stack\u2019s 72MW campus in Truganina and AirTrunk\u2019s up-to-120MW facilities as examples of how similar Melbourne is developing to Sydney at the top-end capacity-wise.<\/p>\n\n\n\n Melbourne\u2019s population will be bigger<\/strong><\/p>\n\n\n\n \u201cAlthough Sydney long holds the crown, we\u2019re seeing strong potential down in Melbourne,\u201d said Vertiv associate director, colo & cloud ANZ, Ben Crowe. \u201cThe city\u2019s current 294MW of built-out IT load will reach 520MW by 2028, which is a 40% jump, according to Structure Research. This is representative of several players, including NextDC and Microsoft, recently entering new facilities to the southern market with plans to tap the city\u2019s expanding arena of financial, university, and healthcare organisations.\u201d<\/p>\n\n\n\n \u201cThese businesses are after enterprise-level cloud services, which boast better latency. So, the closer the data centre, the better. And this is particularly relevant with Melbourne\u2019s population set to overtake Sydney\u2019s,\u201d he said. \u201cAs the most populous city, there will be more digital users and increased pressure from large corporates demanding faster latency.\u201d<\/p>\n\n\n\n \u201cThis is why we expect to see growth in Melbourne\u2019s west with its flat land, ability to provide large power capacity from the power authority, and proximity to the CBD invaluable for greenfield development,\u201d said Crowe. \u201cOur work with NextDC is delivering just that \u2013 the\u2026[operator\u2019s] M2 facility in Tullamarine and M3 facility in West Footscray is set to collectively deliver 210MW of critical IT infrastructure to the region, in addition to more capacity from numerous other industry players.\u201d<\/p>\n\n\n\n