Colocation Data Centers See Surge in Demand

Colocation data centers have been an option for more than two decades. But the surge in the demand for data processing, the high cost of in-house data centers, and the appearance of cloud providers has dramatically changed the market. Understanding the new dynamics of the market is important for both colocation providers and facility managers in enterprises that may be considering a move to a colo.

Today, colocation data centers remain an attractive choice for many enterprises. But finding the right colocation data center with the right services and price remains a complex task.

Businesses in sectors such as banking and finance have realized that running their own data centers is “not a good use of capital, because they aren’t data-center companies,” says John Hatem, executive vice president of design, construction, and operations at CyrusOne, which owns more than 40 data centers worldwide. The joke in his industry, he says, used to be that “our biggest competitor was the CIO” at companies where data storage was not the core business.

That’s good news for colos, which are growing rapidly. Hatem says his company is spending $1 billion this year on land and construction, “and there’s no end in sight.”

Another major colocation provider, RagingWire, currently manages 1.5 million square feet of space and is developing 3 million more square feet. “We’re building as fast as we can,” says Joe Goldsmith, chief revenue officer and senior vice president for RagingWire.

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