Wholesale Colocation: The Rising Star of Data Center Real Estate

23 Jun 2025 by Datacenters.com Wholesale Colocation

The global demand for data center space is skyrocketing. From AI to video streaming and from SaaS platforms to digital-first enterprise strategies, workloads are more compute-intensive and power-hungry than ever. Amid this surge, wholesale colocation is emerging as the preferred infrastructure model for hyperscalers, cloud providers, and large enterprises that need speed, scale, and cost efficiency—all without owning and operating their own facilities.


As we delve into this transformative trend, it’s clear that wholesale colocation is no longer just a niche solution—it’s fast becoming the cornerstone of modern digital infrastructure.


What Is Wholesale Colocation?


Wholesale colocation refers to the leasing of large-scale data center capacity—typically 250 kilowatts (kW) to several megawatts (MW)—by a single tenant. Unlike retail colocation, where businesses rent rack space or cabinets in shared environments, wholesale tenants often lease entire suites, rooms, or even dedicated buildings.


This model caters to organizations with intensive infrastructure needs, including:


  • Cloud service providers expanding availability zones
  • AI-driven firms running high-density training workloads
  • Content delivery networks requiring scalable edge aggregation points
  • Large enterprises consolidating regional IT into centralized hubs
  • Government or research institutions with custom design and security requirements


Tenants benefit from more control over power, cooling, layout, and connectivity than what retail colocation offers—making it ideal for scaling predictable, long-term infrastructure strategies.


Why Wholesale Colocation Is Booming


1. Hyperscale and AI-Driven Demand

As generative AI models, machine learning pipelines, and real-time inference engines take center stage, infrastructure needs have outpaced traditional colocation offerings. AI clusters require tens of thousands of GPUs or high-performance CPUs, which in turn demand dense power configurations and reliable cooling.


Wholesale colocation providers meet this demand with:


  • Customizable power densities ranging from 10 kW to 50 kW per rack
  • Scalable infrastructure footprints from single megawatt suites to entire buildings
  • Accelerated provisioning through pre-built shells and ready-to-fit capacity


This makes wholesale ideal for AI labs, cloud-scale compute farms, and enterprises deploying high-volume batch workloads or real-time edge analytics.


2. Land and Power Scarcity


Data center development isn’t just about space—it’s about finding locations with:


  • Adequate utility power
  • Existing or expandable fiber networks
  • Local zoning that permits industrial-scale operations


Urban cores and Tier I metros face mounting challenges in land availability, power provisioning, and community resistance to data center builds. Wholesale providers often control strategic campuses in power-rich, fiber-dense regions—such as Northern Virginia, Dallas-Fort Worth, and Phoenix—ensuring faster deployment and minimal development delays.


3. Financial Predictability


Owning a data center offers control, but it comes at a cost—literally. The CapEx to build a new facility can run hundreds of millions of dollars, with ongoing OpEx and staffing burdens.


In contrast, wholesale colocation enables:


  • Operating expenditure (OpEx) models that reduce upfront investment
  • Multi-year lease terms with fixed or indexed pricing
  • Predictable cost structures that align with business growth


It provides the infrastructure without the financial and operational weight of ownership.


4. Time to Market


Designing and commissioning a custom-built data center can take 18 to 36 months. In fast-moving markets like AI and cloud, that timeline is simply too long.


Wholesale colocation providers often deliver:


  • Powered shells ready for rapid tenant fit-out
  • Turnkey build-outs available in months
  • Phased expansion options for future scalability


For businesses aiming to beat competitors to market, this speed is a strategic advantage.


Wholesale vs. Retail Colocation: A Strategic Comparison


While both models share the goal of outsourcing physical infrastructure, their differences are significant:


Scale and Size


Wholesale colocation begins at roughly 250 kW, often scaling to multiple MW. This model serves large tenants with stable, long-term infrastructure requirements.


By contrast, retail colocation typically ranges from 1 kW to a few racks, designed for startups, MSPs, or businesses with moderate compute needs.


Customization and Control


Wholesale tenants often receive dedicated suites or buildings, with options to customize:


  • Power delivery models (e.g., 2N or N+1 redundancy)
  • Cooling configurations (liquid, in-row, or immersive)
  • Physical layout (hot/cold aisle orientation, room partitioning)
  • Interconnection strategy


Retail customers, by contrast, operate in shared environments, limiting their control over physical infrastructure.


Pricing Models


  • Wholesale: Billed per kW or per suite, favoring long-term contracts.
  • Retail: Charged per rack, cabinet, or unit of space (U).


This difference impacts budgeting, with wholesale often offering better cost-per-kW economics at scale.


Provisioning Timelines


Retail space can be provisioned in days or weeks, which suits burst or temporary needs.


Wholesale typically takes weeks to months, but delivers tailored environments that align with business-critical workloads.


Target Customers


Wholesale colocation serves:


  • Cloud providers
  • Enterprises
  • Hyperscalers
  • Government agencies
  • AI companies


Retail colocation supports:


  • SMBs
  • Managed service providers (MSPs)
  • SaaS startups
  • Enterprises needing disaster recovery


Understanding your growth trajectory helps determine which model is right for your business.


Real Estate Meets Infrastructure: Market Trends to Watch


Wholesale colocation sits at the intersection of real estate investment and technology infrastructure—and that convergence is attracting massive capital flows. Here’s how the landscape is evolving:


Private Equity and REIT Activity

Real estate investment trusts (REITs) and private equity funds are pouring capital into data center campuses. Investors see long-term, utility-like returns from wholesale colocation leases—particularly those anchored by hyperscalers.


Strategic Land Development

Locations with robust power availability and dense fiber connectivity—like Ashburn (VA)Phoenix (AZ)Hillsboro (OR), and Atlanta (GA)—are witnessing explosive land appreciation. Investors are actively rezoning industrial land near major interconnect hubs into data center campuses.


Repurposing Commercial Real Estate

As traditional retail and office demand softens post-pandemic, many developers are exploring conversions or redevelopments into powered shells for wholesale use, especially in underserved metros.


Modular and Prefabricated Builds

To speed up delivery, many wholesale providers are adopting modular construction techniques. Prefabricated components allow faster assembly, repeatable quality, and scalable expansion.


These trends point to a future where data center real estate is no longer niche—it’s core to digital infrastructure strategy.


Use Cases Driving Wholesale Colocation Demand


Artificial Intelligence and Machine Learning

AI training clusters—especially those using NVIDIA H100s or similar accelerators—demand high power densitylow-latency networking, and precise cooling. Wholesale colocation provides the infrastructure flexibility to support these evolving AI workloads.


Global Enterprises

Enterprises consolidating infrastructure across multiple countries prefer wholesale colocation for its ability to provide:


  • Unified governance across regions
  • Simplified interconnect with cloud providers
  • Cost-efficient scaling from 1 MW to 10+ MW


Cloud Expansion and Interconnect

Cloud-native companies use wholesale capacity to build availability zonescontent delivery networks (CDNs), and regional edge hubs. Carrier-neutral campuses support low-latency connectivity, cloud exchange access, and scalable routing.


Financial Services

Trading platforms, fintech companies, and exchanges require ultra-low latency environments and direct interconnects to cloud providers and peers. Wholesale colocation offers proximity to financial hubs with hardened security and compliance.


Choosing a Wholesale Colocation Provider: Key Criteria


Selecting the right wholesale partner requires evaluating more than square footage. Here’s what matters most:


Power Availability and Scalability

  • Can the provider support 1–10+ MW deployments immediately?
  • Do they offer scalable power capacity for future growth?


Network Ecosystem

  • Is the facility carrier-neutral?
  • Can it support cross-connects to ISPs, CDNs, and cloud providers?


Geographic Considerations

  • Does the location align with your latencycompliance, and risk profile?
  • Are natural disaster risks (e.g., floods, earthquakes) mitigated?


Delivery Model

  • Does the provider offer powered shellsturnkey suites, or build-to-suit flexibility?
  • Are construction timelines and SLAs transparent?


Sustainability and ESG Metrics

  • Are facilities powered by renewable energy sources?
  • Do they report on PUE, water usage, and carbon emissions?


With data sovereignty and sustainability increasingly in focus, aligning with a provider that supports your ESG objectivesis more important than ever.


The Future of Wholesale Colocation


As digital transformation accelerates, data is becoming the world’s most valuable resource—and wholesale colocation is the engine powering it. The convergence of IT and real estate strategy is giving rise to next-generation campuses that are:


  • Densely connected
  • Rapidly scalable
  • Financially predictable
  • Environmentally optimized


Whether you're building an AI factory, expanding a cloud edge presence, or consolidating infrastructure globally, wholesale colocation provides the agility, control, and scale to thrive.


In the decade ahead, expect wholesale colocation to be the dominant model for organizations seeking both technical performance and real estate value. As demand continues to grow, the real winners will be those who plan and partner strategically—leveraging the full potential of this rising star in data center real estate.

Author

Datacenters.com Wholesale Colocation

Explore the latest trends in wholesale colocation, power density, and scalable infrastructure. Datacenters.com connects you with leading providers through expert consulting and a powerful RFP platform—making it easy to compare capacity, pricing, and performance across the world’s top data centers.

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