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Co-location Data Center Explained

Co-location Center Explained

What is a Co-locationData Center?

A Co-location Data Center, often referred as “Co-lo”, is a data center that offers rack space for rent. You can use these racks to house servers that tap into the data center's resources. Vital resources you can draw from co-location centers include electrical power supply, cooling systems, and more.

Why Server Co-location Centers Are Necessary

Co-location centers allow you to rent even individual server racks
Co-location centers allow you to rent even individual server racks. (Source: Equinix)

Server co-location centers are the most reliable and cost-effective method for companies (or individuals) to host entire servers. You can operate your server without building a complete facility by renting a small space in the co-location center.

Data centers are massive and expensive to run. However, they are the only way companies can host servers able to access the facilities needed to run effectively.  The average co-location center provides access to robust facilities such as high-speed internet connections and backup generators.

The only alternative would be to run your server from an office or other offsite facility. The setup fees for that would still be high. Additionally, hosting servers outside co-location centers will result in less reliable operations.

Advantages of Co-location Data Centers

Co-location data centers are generally built and operated by third parties. Their expertise and investment mean renting space in co-location data centers offers you multiple distinct advantages.

1. Less Technical Expertise Required

Data centers often come with skilled technical experts to monitor overall operations. These experts can also be “loaned” to you if necessary – at a price. This convenience means you won't have to deploy expensive technical teams to oversee your server operations 24/7.

2. Cheaper Startup Costs

Most companies simply won't have the funds to build and operate a standalone data center. Thanks to co-location centers, these costs go away, and you only need to pay a monthly or annual fee.

These centers have the infrastructure and space to house your servers and networking equipment, but you won't need to invest in purchasing these items yourself.

3. High Levels of Security

Co-location data centers offer greater security for storing and maintaining your company's servers and applications. These centers are protected by multiple layers of physical security and 24/7 monitoring, ensuring that your data is always safe.

4. Better Scalability

Since co-location centers often have large amounts of space, you can scale up operations quickly. Rent more space, install a new server, and your company's computing power immediately boosts.

5. Robust Infrastructure

All co-location centers come with high redundancy built into their systems. If a network line fails, data can automatically be directed along an alternative route while the primary line gets repaired. The same goes for power supply, cooling, and most other facilities.

6. Access to More Geographic Locations

Rental means you can cost-effectively split your company's server farm across multiple continents. This advantage allows you to better serve a broader customer base, improve performance, or even meet compliance requirements.

Types of Co-location Facilities

Co-location centers are a high-level term you can view as retail, wholesale, and hybrid facilities. Knowing the difference can help you isolate the facility relevant to your business.

Retail Co-location

These facilities are open to almost everyone who can pay for them. Retail co-location often means you can rent even a single rack for one server. Some retail co-location facilities even allow customers to rent space within a rack for smaller operations.

Wholesale Co-location

As the name suggests, wholesale co-locations are for corporate customers who rent chunks of entire data centers. Companies requiring this option are often sizeable or rent wholesale to sublet (for example, web hosting companies). Wholesale co-location is often cheaper than retail co-location but may offer fewer facilities.

Hybrid Co-location

Some co-location facilities allow both retail and wholesale operations. This hybrid allowance means then can be for retail or wholesale. However, operators may also retain some space for in-house operations. Most hybrid co-location facilities come in tiered grading to indicate the overall quality of operations.

Understanding Co-location Center Tiers

Four primary quality levels indicate the level of support co-location centers can provide –  Tier 1, Tier 2, Tier 3, and Tier 4.

  • Tier 1 co-location centers offer a single distribution path for IT equipment. This single path means a lack of redundancy in routing and components.
  • Tier 2 is mostly the same as Tier 1 but adds component redundancy.
  • Tier 3 co-location centers include all Tier 1 and Tier 2 facilities. They also offer multiple distribution paths for IT equipment and redundancy in power supply.
  • Tier 4 is the most robust quality co-location center and covers Tier 1, 2, and 3 facilities. It adds fault-tolerant systems (electrical, storage, and more) and comes with dual HVAC cooling systems.

How to Choose Your Ideal Co-location Center

When choosing an ideal co-location center, consider what will work best for you. Do you need the latest hardware or software? How many power outlets do you need? Is it essential to be close to green energy or have other carbon-friendly energy policies? 

Here are just some of the factors that may influence your decision.


Security is a top concern for many businesses. Access to high-grade physical security, including 24-hour onsite security staff, individualized monitoring of each rack and floor, alarmed perimeter fencing, and surveillance cameras, is essential.


The physical support structure and processes will affect your data center services' availability, performance, and security. Data centers have very specialized operating requirements, making their design and construction more complex than traditional construction projects.


Most organizations' data centers are their most valuable assets, so creating an environment where they can operate at peak efficiency and be as productive as possible is crucial. A percentage or grade usually represents co-location center reliability.

Cross Connectivity

Cross connectivity is an essential aspect of co-location centers because it allows internet and network providers to have their data interconnect smoothly. It helps connect servers to data center redundancy infrastructure, ensuring operations continuity.


Compliance is a significant concern for data center operators, especially those in the financial,  healthcare, and legal industries. For example, customers who store or process Protected Health Information (PHI) in a co-location facility must be able to demonstrate that the facility meets all legal requirements for protecting PHI.

Technical Support

Technical Support in Co-location Data Centers, also called on-site technical support, helps customers resolve complex technical issues. Remember that this is often your first line of defense if something goes wrong – so make sure you know what your co-location center will or won't handle.

Examples of Co-location Centers

The co-location data center business is massive. In 2020 the market value reached $44.42 billion, and the number is steadily climbing. Because of this, several giant companies compete for the top spot in the lucrative industry.

Some players include;


Equinix is a good choice for those needing more choice in co-location placement.

Equinix is a Silicon Valley-based company that runs a worldwide network of co-location centers. Launched in 1998, it aims to provide companies access to vendor-neutral data centers that are highly connected.

Overall, Equinix offers customers access to over 240 data centers worldwide. These centers cover over 70 urban locations and boast a collective uptime of 99.9999%. Places covered range from the United States to Europe, the Middle East, Africa, the Asia Pacific, and more.

NTT Communications Nexcenter

NTT data centers cluster in or around major urban centers.

Nextcenter is the data center arm of NTT Communications, a Japanese telecommunications service provider. It offers customers access to high-speed networks worldwide that support everything from mission-critical servers to those needing complex IT environments.

Like Equinix, Nextcenter operates worldwide and covers the Americas, EMEA countries, and the Asia Pacific region. Over 160 data centers rest under the NTT umbrella, spanning around 20 countries.

Global Switch

Global Switch
Global Switch data centers are the cream of the crop.

Global Switch started at roughly the same time as Equinix. Today it's grown into a similar data center behemoth – in quality if not scale. Global Switch operates 13 data centers that cover Europe and the Asia Pacific Region.

More important to potential customers is that Global Switch data centers are primarily Tier 4-certified. That means massive facilities that can withstand everything from the average power cut to the intensities of natural disasters.

Final Thoughts

Co-location centers are a big business and cater to all levels of customers. Whether you're an individual seeking to house a private server or a company that needs space for hundreds, there are many options.

Remember that depending on the nature of your requirements, not all co-location centers will be able to support your needs. It's often easier for companies to access co-location services. Individuals can consider approaching resellers for co-location services, such as web hosting service providers.

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Article by Timothy Shim

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