How to negotiate a fair data center colocation agreement Colocation vs. cloud: What are the key differences?

Top 5 colocation providers of 2021

Colocation companies offer a wide range of facilities and services that can help organizations reduce or eliminate the costs associated with managing their data centers.

There's a growing demand for third-party, on-premises data centers that enable organizations to reduce or eliminate expenses related to managing power, connectivity, space and cooling. But selecting a data center to host an organization's equipment is far from easy, as there are numerous colocation providers that offer a multitude of services and contracts.

Colocation services can best be thought of as fractional data center leasing. Rather than incurring the cost of purchasing or leasing an entire data center, colocation allows organizations to share data center costs with other businesses by leasing only the amount of data center space they need.

One of the key benefits of colocation is that because the colocation facility handles things such as connectivity, power and cooling, the IT staff is freed up to work on more important things. Leasing space in a colocation facility can also help an organization reduce its IT staffing and equipment-related costs.

Questions to ask before selecting a colocation provider

Before choosing a colocation provider, an organization must understand its current and future business needs and IT requirements. An organization should answer the following questions before selecting a colocation company and signing a contract.

  1. What does the organization hope to achieve by using a colocation data center? For example, is the goal to reduce costs, or will the colocation facility act as a failover data center or provide additional floor space beyond what the organization currently has in its own data center?
  2. How much floor space will the organization need in the colocation facility? The organization also needs to consider the number of racks and cabinets it will need, as well as whether it will be required to provide these items themselves or if the colocation facility will provide them.
  3. What specific items and services does the organization need the colocation site to provide? Floor space, power and cooling are a given, but there are additional considerations. These might include security monitoring, high-speed interconnects to other data centers or other essential items.
  4. What is the organization's budget? Facilities for colocation data center providers vary widely in terms of cost. The lease price is based on a number of different factors, including the amount of floor space the organization is leasing, the city in which the colocation facility resides and the amount of power the organization will be consuming. Cost can also vary based on the ancillary items the colocation facility will be providing and whether bandwidth is included in the price.
  5. What is the time period of the lease the organization needs? Although there are boutique colocation companies that offer extremely flexible leasing plans, larger colocation providers might require annual or even multiyear leases. It's sometimes possible to get a better price by agreeing to a longer lease period.

Let's examine what five leading colocation data center companies offer.

How colocation providers compare


CoreSite operates 24 locations in the U.S. and partners manage international locations. Founded in 2001 as part of The Carlyle Group's portfolio, CoreSite's key focus is on high-performance data center offerings in communication hubs across the U.S., including Boston, Chicago, Denver, Los Angeles, Miami, New York, Northern Virginia and Washington, D.C., and the Silicon Valley. The company offers 4.6 million square feet of floor space.

Notable features and specs include the following:

  • CoreSite operates locations in key markets.
  • The company's service-level agreement (SLA) offers a 100% uptime guarantee.
  • CoreSite offers hybrid cloud options with interconnects to the Amazon, Microsoft, Google and Alibaba clouds.
  • CoreSite provides move-in assistance with dedicated project management resources.
  • The company operates the CoreSite Open Cloud Exchange cloud platform.

Key takeaway: CoreSite's key differentiator is its ability to maintain a high quality of service as measured by low latency, high availability and traffic throughput.

Cyxtera Technologies Inc.

Cyxtera operates 62 data centers in North America, Europe and the Asia-Pacific region. Launched in May 2017 with the acquisition of CenturyLink's data center and colocation assets, Cyxtera operates 2.9 million square feet of data center floor space with a 250-megawatt capacity.

Notable features and specs include the following:

  • The company operates locations in key global markets.
  • Cyxtera's SLA offers a 100% power uptime guarantee.
  • Cyxtera manages all wiring from the cage to the network room.
  • The company strictly adheres to industry standards for cabling and data center design, including TIA-942.

Key takeaway: Cyxtera technicians hold numerous certifications, including Project Management Professional, ITIL, Cisco CCNA, Alcatel Lucent Service Routing Certification and Certified Data Management Professional.

Digital Realty Trust

Digital Realty operates more than 280 facilities in over 20 countries across six continents, including Africa, Australia, Europe, North America and South America. At the beginning of 2020, the company had 34.5 million square feet of rentable space.

Digital Realty was founded in 2004 with an American IPO but expanded to Europe in 2005 and Asia in 2010.

Notable features and specs include the following:

  • The company's U.S. colocation facilities are 100% wind powered.
  • Digital Realty offers seamless interconnectivity to partners, customers and service providers.
  • The company guarantees 99.999% availability.
  • Customer data is kept secure through a five-step validation process.

Key takeaway: Digital Realty is focused on sustainability, with more certified green buildings than any other colocation provider.

Equinix Inc.

Equinix operates more than 227 data centers in 26 countries and more than 55 major metropolitan areas around the world. It recently expanded services to India. The company offers an estimated 22.2 million square feet of data center space.

Equinix was founded in 1998 in Redwood City, Calif. The company specializes in internet and data centers, with a focus on risk mitigation.

Notable features and specs include the following:

  • Equinix data centers guarantee 99.9999% availability.
  • The company offers Business Continuity Trading Rooms (BCTRs) to financial trading companies.
  • Equinix achieved 92% renewable energy globally in 2019.
  • Equinix has 165 data centers using 100% renewable energy.
  • Physical data center access typically involves passing through five security checkpoints.

Key takeaway: Equinix's massive global presence, industry-leading SLA and offerings such as BCTRs make this colocation provider well suited for use by financial services companies.

NTT Ltd.

NTT operates more than 160 data centers in 20 countries across four continents, including North America, Europe, Asia and Australia. The company offers an estimated 5.3 million square feet of data center space.

NTT was founded in 2019 and is headquartered in London. The company is owned by NTT Inc., a Japanese telecommunications company formally known as Nippon Telegraph and Telephone Corp.

Notable features and specs include the following:

  • NTT data centers guarantee 99.99999% availability.
  • NTT is one of the largest global tier-1 IP backbone providers in Asia.
  • The company claims to have the world's largest portfolio of tier 3 data centers.
  • NTT complies with more than 300 global data center standards.
  • The company offers a 24/7 remote hands service for troubleshooting and maintenance.

Key takeaway: A relative newcomer, NTT Ltd. places a heavy emphasis on network performance and compliance with global standards for data center operation.

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