Data Centers
Colocation: Capacity Secured
Key Takeaways
Colocation places your servers and network gear in a professional data center where the provider delivers power, cooling, rack space, physical security, and bandwidth. You keep full control of your hardware without building or running the facility. ObsidianX scopes power, space, and interconnection needs, then bids them across a vetted shortlist of data center operators at no cost to you.
Data center capacity has become the scarcest resource in IT. We scope your power, space, and interconnection requirements, then bid them across our data center shortlist and the broader market, so you lock in the right facility at market rates before pricing and availability move again. Weighing cloud instead? See how colocation compares to cloud.
Why colocation is the capacity story of 2026
The data center market has flipped from a buyer's market to an allocation market. CBRE's June 2026 global report puts average vacancy across sixteen major markets at a record low 6.6 percent, with Northern Virginia at 0.3 percent and Dallas Fort Worth at 1.8 percent. North American inventory grew 33 percent in a year and vacancy still fell, because AI demand is absorbing capacity faster than anyone can build it.
Power is the constraint behind the constraint. CBRE reports that grid power capacity for existing projects is largely booked through 2030 in most markets, and JLL's 2026 outlook reaches the same conclusion: power availability, not land or capital, now decides where and when capacity gets built. Asking rates followed, averaging $195.94 per kilowatt per month for mid size deployments at the end of 2025, up 6.5 percent in a year. Analysts size the global colocation market at roughly $93 to $105 billion in 2026, growing 9 to 15 percent annually.
For buyers this changes the playbook. Capacity in the metros you want is allocated, not shopped, incumbents treat renewals as leverage events, and the AI story means your neighbors are bidding for the same kilowatts. The teams that win start early, scope precisely, and bid the requirement across the market instead of extending with the incumbent by default. That is exactly the process we run. And the honest framing on cloud: this is not an exodus. IDC finds most enterprises repatriating something while very few leave cloud entirely. The durable pattern is hybrid, with steady workloads on owned hardware in colocation and variable workloads in cloud.
What colocation actually costs
Colocation is priced on power, not square feet. Committed kilowatts drive the bill, and the line items around them decide whether a cheap looking quote stays cheap.
| Cost component | What it is | What to watch |
|---|---|---|
| Space | Rack units, a quarter to full cabinet, a cage, or a suite | Minimum power commitments step up with each format; do not buy a cage worth of commitment for a cabinet worth of gear |
| Committed power | Billed per kilowatt per month, the core of the invoice | Billed versus breakered capacity, and paying for committed kilowatts you never draw |
| Cross connects | Monthly fee per physical connection to carriers, clouds, and partners | Rates vary enormously between operators and add up fast at volume; always negotiated on our bids |
| Remote hands | On site technicians working on your gear, billed in short increments | Hourly rates, response time SLAs, and whether any hours are included |
| Bandwidth | Blended internet or transit, billed flat, metered, or at the ninety fifth percentile | The billing model changes the economics of bursty traffic; match it to your profile |
| Term and escalators | Contract length plus the annual percentage increase | Escalators compound quietly and are negotiable before signature, almost never after |
Be skeptical of universal savings percentages in colocation marketing, including comparisons against cloud. Every credible number depends on workload profile, scale, and egress, which is why we model your actual estate instead of quoting industry folklore.
Scoping is free and vendor neutral. Bring us a renewal, a growth plan, or a first deployment, and we will tell you what the requirement really is and what the market will charge for it, before any operator knows your name.
The Equinix fit, and the rest of the shortlist
For global interconnection and cloud adjacency, the bid set usually starts with Equinix. The company reports more than 260 IBX data centers across 70 plus metros, has surpassed 500,000 total interconnections, and its Equinix Fabric service provisions private connections to clouds and partners on demand. It is also further along than most of the industry on AI readiness, rolling out direct to chip liquid cooling across more than 100 facilities, supporting rack densities beyond 200 kilowatts, and collaborating with Cisco and NVIDIA on standardized AI factory architectures. Momentum matches the positioning, with quarterly revenue up 16 percent year over year in mid 2026 and guidance raised twice in a row. None of that makes Equinix the automatic answer, but when interconnection density, global reach, or AI density lead your requirement, it earns the first look.
The rest of our featured tier covers the requirements Equinix does not lead: Digital Realty for scale alongside the hyperscalers, CoreSite, an American Tower company, for US metro interconnection, Flexential for mid market colocation with cloud and DR services attached, and TierPoint for regional markets with managed services. Behind them sits the broader grid, including QTS and the regional specialists, and every requirement we scope is bid across whichever of them genuinely fit.
See the full data center shortlist on our providers pageColocation vs cloud: the honest comparisonCloud and migration consultingManaged networks for the connectivity into your racks
How to evaluate a facility
- Power and density: kilowatts per rack available today, growth headroom in writing, and A and B power feeds to every cabinet.
- Resilience: concurrently maintainable design, generator and fuel arrangements, and whether Tier claims are backed by actual Uptime Institute certification or just marketing language.
- Compliance: SOC 2 Type II under SSAE 18, ISO 27001, PCI DSS validation, and HIPAA workload support under a business associate agreement, scoped to the specific facility rather than the company.
- Interconnection: how many carriers are on net, meet me room access, direct cloud on ramps, and what each cross connect costs per month.
- Operations: remote hands rates and response SLAs, shipping and staging space, and the physical security layers between the street and your rack.
- Contract: escalator percentage, expansion rights and right of first refusal on adjacent space, renewal notice windows, and what the SLA actually pays when it is missed.
Key benefits of our Colocation services
Predictable cost without building your own
Colocation converts facility capital expense into a predictable monthly rate. The operator funds the generators, UPS systems, cooling plant, and physical security that a private server room never justifies.
Carrier neutrality and interconnection
Carrier neutral facilities put dozens of networks and cloud on ramps in the same building, so you choose connectivity on merit and price instead of inheriting one carrier's lock in.
Compliance ready environments
Leading facilities maintain SOC 2 Type II reports, ISO 27001 certification, and PCI DSS validation, and support HIPAA workloads under a business associate agreement, which makes your own audits materially easier.
Power density for modern workloads
High density racks and liquid cooling options support AI and GPU deployments that an office server room's power and cooling simply cannot feed.
Resilience engineered in
Concurrently maintainable facilities with redundant A and B power paths, layered physical security, and tested failover deliver uptime most businesses could never fund on their own.
One advisor across markets and vendors
We scope the requirement, bid it across operators and metros, and negotiate on your side of the table. We are paid the same regardless of which supplier wins.
Where it pays off
Data center and server room exit
Retire aging on premise rooms on a phased plan that moves steady workloads into colocation without betting the business on an all cloud cutover.
Hybrid core next to the cloud
Run steady state and data heavy workloads on your own hardware with direct cloud on ramps beside them, keeping egress and latency under control.
AI and GPU deployments
GPU clusters need power density and cooling that legacy rooms and many older facilities cannot support. We source facilities with real high density capacity.
Disaster recovery and compliance sites
Stand up a secondary site in a different risk region with certified controls, without acquiring and staffing a second building.
From first look to proven results
One team owns the whole path, so you are never refereeing between a consultant, a vendor, and an installer.
- 01
Scope
We document your real requirement: kilowatts and density per rack, space format, compliance needs, latency and market constraints, and growth headroom. Most first quotes fail because this step was skipped.
- 02
Bid the market
The same requirement goes to every operator that genuinely fits, from global interconnection platforms to regional specialists, so proposals come back comparable instead of apples to oranges.
- 03
Negotiate
Term, escalators, cross connect and remote hands rates, expansion rights, and SLA remedies all move when operators know they are competing. We run that process on your side of the table.
- 04
Migrate and manage
We coordinate the migration plan, connectivity, and cutover, then stay on the account for renewals, audits, and expansion so the leverage never lapses.
Perfect for
- Businesses running production hardware in aging server rooms or office closets
- Teams repatriating steady state workloads whose cloud bills keep climbing
- IT leaders facing an AI or GPU deployment their building cannot power
- Regulated organizations that need certified facilities and audit ready controls
The ObsidianX advantage
We work for you, not for quotas
Unlike a direct sales rep, we are paid the same regardless of which supplier wins. That means our only incentive is the solution that actually fits your business, benchmarked against the whole market.
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Colocation in your industry
Frequently Asked Questions
Questions buyers actually ask about colocation, answered plainly.
What is colocation and how is it different from cloud hosting?
Colocation rents you secure space, power, cooling, and bandwidth in a professional data center for hardware you own and control. Cloud rents you the computing itself on someone else's hardware. Most businesses end up hybrid, with steady workloads on owned equipment in colocation and variable workloads in cloud. ObsidianX models both economics before recommending either, because we are paid the same regardless of the answer.
How is colocation priced?
Modern colocation is priced on committed power, quoted per kilowatt per month, plus the space format you take, whether a few rack units, a cabinet, a cage, or a suite. Cross connects, remote hands, and bandwidth are billed separately and vary widely between operators. Term length and annual escalators move the total materially, which is why ObsidianX benchmarks every component across operators rather than accepting a single quote.
Is colocation cheaper than the cloud?
For steady state workloads at meaningful scale, colocation usually wins on total cost, especially once cloud egress fees are counted. For bursty, variable, or experimental workloads, cloud usually wins because you pay only for what you use. The honest answer is a workload by workload model, not a slogan, and ObsidianX builds that model with your real numbers before anything moves.
What is the difference between a cabinet, a cage, and a suite?
A cabinet is a single lockable rack, and many businesses start with a half or quarter cabinet. A cage is a fenced private area holding multiple racks with its own access control. A suite is a fully enclosed private room within the facility for the largest footprints. Pricing and minimum power commitments step up at each level, so matching the format to your actual growth curve matters.
What is a cross connect and why does carrier neutrality matter?
A cross connect is a dedicated physical cable inside the data center linking your equipment directly to a carrier, cloud provider, or partner, bypassing the public internet for lower latency and better security. Carrier neutral facilities host many competing networks, so you can buy connectivity on merit. Cross connect fees recur monthly and vary enormously between operators, which makes them a real negotiation item on any bid.
Do I need a Tier III or Tier IV data center?
Tier III means concurrently maintainable: the facility can undergo maintenance without shutting your equipment down, and it is the standard enterprise choice. Tier IV adds full fault tolerance at a meaningful price premium, which mainly makes sense for workloads where any interruption is unacceptable. One caution: many operators say Tier III designed without holding an Uptime Institute certification, so we verify what is actually certified during diligence.
Can I run AI or GPU workloads in colocation?
Yes, and colocation is often the only practical home for them, because GPU racks can draw many times the power of traditional server racks and increasingly need liquid cooling. Not every facility can deliver that density, and the ones that can are filling fast. If an AI deployment is on your roadmap, securing density and power early matters more than almost any other decision.
How long are colocation contracts and how does term affect price?
Typical terms run one to three years, with month to month space carrying a significant premium where it is offered at all. In today's supply constrained market, longer terms are often the price of securing capacity in tight metros, but escalators, renewal notice windows, and expansion rights are all negotiable before signature. ObsidianX manages those terms at signing and tracks the renewal calendar so the leverage stays yours.
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