AI Vocabulary · 02 AI Infrastructure
What is Colocation?
Renting space, power, cooling and network connections in someone else's data centre, while you bring and run your own servers.
In a colocation data centre, the operator provides the building, the electricity, the cooling, physical security and the network connections. The customer installs and runs its own servers. Prices are usually quoted per kilowatt of committed power per month, because power and cooling are the scarce goods.
Colocation sits between owning a data centre and renting machines from a cloud. According to Synergy Research, colocation providers held about 20% of global data centre capacity at the end of 2025, hyperscalers 48% and companies' own sites 32%.
Why it matters for you
If you want your own hardware without building a server room, colocation is the usual route. For AI, check whether the site can deliver the power per rack and the liquid cooling that GPU servers need. Many older halls were built for about 10 kW per rack.
Own it
Ask for the kilowatts available per rack, the cooling type, the contract length and the price per kW. Compare the total with renting the same capacity from a cloud before you buy servers.
Where it comes from
Capacity shares come from Synergy Research Group, Hyperscale operators to account for 67% of all data center capacity by 2031 (April 2026).
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