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How to Evaluate Data Center Colocation: A Buyer’s Guide

What Is Colocation?

Colocation (often abbreviated “colo”) is the practice of housing your servers, networking equipment, and storage hardware in a third-party data center facility. Instead of building and maintaining your own data center, a capital-intensive proposition that can cost $10M+ for even a modest facility, you rent space, power, and cooling from a colocation provider.

Enterprise buyers choose colocation for several reasons: predictable monthly costs, access to carrier-neutral connectivity, physical security, and the ability to scale capacity without building new facilities.

Key Evaluation Criteria

When comparing colocation facilities, focus on these critical factors:

Tier Rating

The Uptime Institute’s tier classification system rates data centers from Tier 1 (basic) to Tier 4 (fault tolerant):

  • Tier 1: Single path for power and cooling, 99.671% uptime (28.8 hours downtime/year)
  • Tier 2: Redundant components, 99.741% uptime (22 hours downtime/year)
  • Tier 3: Concurrently maintainable, 99.982% uptime (1.6 hours downtime/year)
  • Tier 4: Fault tolerant, 99.995% uptime (0.4 hours downtime/year)

For mission-critical workloads, Tier 3 is the minimum recommended standard. Tier 4 is preferred for financial services, healthcare, and government applications.

Power Capacity

Power is measured in kilowatts (kW) per rack or cabinet. Standard enterprise deployments use 6-8 kW per rack, while high-density and AI workloads may require 20-50+ kW per rack.

STAT 1.38 Average PUE across all facilities in the GoDataCenters directory

Key power questions to ask:

  • What is the maximum kW per rack available?
  • Is metered or circuit-based power billing used?
  • What redundancy level is provided (N, N+1, 2N)?
  • Is on-site generation (diesel/gas) available for grid outages?

PUE (Power Usage Effectiveness)

PUE measures how efficiently a data center uses energy. A PUE of 1.0 would mean 100% of energy goes to computing equipment. In practice:

  • PUE 1.2-1.4: Good efficiency (modern facilities)
  • PUE 1.4-1.6: Average
  • PUE 1.6+: Below average, often older facilities

Lower PUE translates directly to lower operating costs, as less energy is wasted on cooling and overhead.

AI and High-Density Considerations

If you’re planning to deploy GPU workloads for AI training, inference, or high-performance computing, evaluate these additional factors:

  • Liquid cooling support: Direct liquid cooling (DLC) or rear-door heat exchangers for 30+ kW/rack densities
  • Power density: Ensure the facility can deliver the kW per rack your GPU clusters require
  • Network fabric: Low-latency interconnects between racks and rows for distributed training
  • GPU hosting experience: Ask the provider about their track record with GPU deployments

Certifications and Compliance

Depending on your industry, you may need facilities with specific certifications:

  • SOC 2 Type II: Standard for service organizations, covers security, availability, and confidentiality
  • ISO 27001: International information security management standard
  • HIPAA: Required for healthcare data (look for HIPAA-compliant facilities with BAA availability)
  • PCI DSS: Required for payment card data processing
  • FedRAMP: Required for federal government workloads

How to Request and Compare Quotes

The colocation procurement process typically follows these steps:

  1. Define requirements: Power (kW), space (cabinets/cages), connectivity, compliance needs
  2. Shortlist facilities: Use a directory like GoDataCenters to filter by location, tier, and capabilities
  3. Request quotes: Submit RFQs to 3-5 providers for competitive pricing
  4. Evaluate proposals: Compare on total cost of ownership, not just rack rate
  5. Site visit: Tour your top 2-3 facilities before signing
  6. Negotiate terms: Contract length, power escalation clauses, SLA terms

Ready to start your search? Browse facilities or request a custom quote to get personalized recommendations from our advisory team.

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