Flying Colo: Colocation Market Continues to Grow, Diversify

"Data center colocation continues to be a hot-ticket item for organizations looking to scale up their infrastructure and network capacity without procuring a bundle of new on-site hardware. It’s also appealing to companies “coming in from the cold” and realizing the need to have backup in a key business locale or a land far, far away to help provide secure data storage and disaster recovery without losing the ability to manage servers.

The colocation market continues to rise on all fronts, according to a recent report by MarketsandMarkets. The global market for colocation is expected to be worth $43.34 billion by 2018, up from a projected $25.72 billion in 2013. This represents a compound annual growth rate of 11 percent from 2013 to 2018.

Retail and wholesale colocation services are both on the upswing across every industry vertical the study evaluated. The market is also experiencing some shifts in the technological focus and service offerings of the two types of colocation. Traditionally offering lower power capacity ceilings, retail colocation providers are adding power, occasionally passing the 1 megawatt mark. Many wholesale vendors, traditionally the hands-off half of the colocation option duo, are increasingly augmenting their colocation hosting with managed services and network infrastructure options.

Where Are Companies Colocating? Part I: Sea Changes in Leading Markets
A report by TeleGeography found that there are also shifts in the fastest-growing markets, as the traditional hubs, such as Washington, D.C., and New York City, experienced more modest growth. Colocation Seattle, Dallas and Toronto all experienced between 20 and 28 percent compound annual growth in capacity between 2010 and 2013, and now offer 3.3 million, 1.2 million and 1 million square feet of gross data center floor space, respectively. While New York City and Washington, D.C., continue to have more space, they experienced compound annual growth in capacity of only 12 and 11 percent, respectively, over the last three years.

The report also offered some interesting news about colocation markets elsewhere in the world. Colocation Paris is increasing rapidly, with a 25 percent CAGR of capacity added in the last three years. Frankfurt, Zurich and Moscow all experienced compound growth in capacity between 16 and 18 percent annually over the last three years. London colocation space, however, rose at a CAGR of only 8 percent between 2010 and 2013. In Asia, Mumbai and Singapore colocation space continued to rise steadily, with 15 percent CAGRs in both cities, but were surpassed by the astounding 34 percent growth in capacity in Hong Kong over that time period.

The rise of several alternate markets as some former front runners see less growth, especially in North America, likely indicates that companies in the leading metro areas are either focused on higher density computing within existing space limits or sending their colocation requirements to places where economic climates could be more favorable.

Where Are Companies Colocating? Part II: Secondary Markets Rising
Although the rise of colocation markets in such U.S. cities as Seattle and Dallas is likely not surprising, investment in and construction of state-of-the-art colocation facilities in other cities could be less well known.

Nebraska Colocation Center recently opened a facility in Lincoln that will offer 45,000 square feet of space, with design requirements that meet at least Tier II certification.
Zayo subsidiary zColo will build out a 24,000-square-foot colocation facility within Digital Realty Trust‘s Miami Data Center, providing 4 MW of power and a fully redundant N 1 architecture.
Colocation provider CyrusOne recently announced the expansion of its Cincinnati data center, adding 20,000 square feet of space and 2.25 MW of power to the now 212,200-square-foot, 13-MW power facility.
As more companies across industry verticals seize on colocation services to house critical servers and offer better network support, continued market expansion seems to be the way of the world."