Colocation Data Centers in 2025: Power, AI, and the Real Geography of Demand
In 2025, colocation data centers are under more pressure and more opportunity than ever before. The reason? A perfect storm of three unstoppable forces: AI’s explosive infrastructure needs, sustainability mandates with real regulatory teeth, and the long-expected arrival of edge computing at meaningful scale.
This is not a minor shift. The traditional colocation playbook-power, cooling, security, and space-is no longer enough. IT leaders now must evaluate colocation as part of a broader ecosystem where data gravity, fiber routes, latency requirements, and carbon audits all intersect.
The 2025 Pressure Cooker: What’s Driving the Change
We’ve hit a convergence point:
- AI workloads are real and scaling fast: Multi-hundred-megawatt campuses are no longer rare
- Sustainability is now regulated, not optional: Scope 3 emissions and ESG reporting are critical
- Edge computing is deploying beyond pilots: Latency now affects compute, not just content
Jonathan Schildkraut, head of Capital Markets at Compass Datacenters, said it plainly: “We’re talking about 60 to 70 gigawatts of global data center demand in the next five to six years. And the industry isn’t prepared for that level of capital, infrastructure, or power.”
AI Is Breaking the Infrastructure Mold
In past years, hyperscale deployments revolved around availability zones and proximity to users. AI is different. Training clusters don’t need to be close to end users-they need land, power, cooling, and fiber.
A single megawatt of AI can host approximately $50 million in GPU hardware. NVIDIA’s 2023 data center sales alone drove 1.25 GW of demand. Global AI deployments in 2024 reached 7–8 GW. And it’s still early.
Schildkraut adds: “There’s a wall of water behind what you can see. We haven’t even hit the real wave yet.”
AI training workloads require:
- 30–70 kW per rack
- Liquid or hybrid cooling systems
- 400G/800G Ethernet or InfiniBand networking
- NVMe or parallel storage architecture
Legacy colocation designs can’t handle this. Today’s facilities must:
- Support high-density zones
- Enable rapid modular electrical/mechanical upgrades
- Integrate with GPU-as-a-Service models
Why Geography Looks Different in the AI Era
You don’t need to be near population centers-you need to be near power and fiber. That’s the new geography.
Schildkraut explains: “What looks like the middle of nowhere-Lincoln, Cheyenne, Council Bluffs-is actually prime real estate when you map East-West fiber corridors.”
Why?
- Union Pacific’s 41st parallel supports critical fiber infrastructure
- Easement strategies have built a long-haul fiber backbone
- These areas offer land, power, and latency-agnostic deployment
Smart operators now prioritize:
- Long-haul fiber adjacency
- Campus-scale land acquisition (200+ MW)
- Local utility partnerships and scalable power sourcing
Sustainability: From Buzzword to Business Requirement
Sustainability in 2025 is driven by:
- Scope 3 emissions accountability
- EU taxonomy and state-level efficiency laws
- ESG-backed financing and carbon SLA enforcement
Top providers now offer:
- Real-time energy dashboards
- ISO 50001 certification
- Renewable power procurement with proof
- Water efficiency and heat reuse technologies
Schildkraut notes: “If your colo-partner can’t give you a carbon report with your invoice, they’re already behind.”
Edge Is Finally Real-But Targeted
Edge computing has materialized, especially in telecom, manufacturing, and healthcare sectors but adoption varies by region and use case.
Real use cases:
- Metro-edge inference for low-latency AI
- MEC tied to telecom infrastructure
- Industrial AI near factories and logistics hubs
Hyped use cases:
- Ultra-far edge for general workloads
Smart edge strategy focuses on logical-not just geographic topology:
- Tier-2/3 metros with fiber and available power
- Colocation for inference near customer data
- Core training clusters near large-scale power
Comparison Table: Modern Colo vs. Legacy
| Feature | Legacy Colo Model | 2025-Ready Colo Data Center |
| Power Density per Rack | 5–10 kW | 30–70+ kW |
| Cooling System | Air-cooled only | Hybrid or liquid cooling |
| AI/GPU Readiness | Limited | Dedicated GPU zones, leasing models |
| Sustainability Reporting | Basic PUE metrics | Scope 1–3 emissions, real-time dashboards |
| Edge Support | Minimal | Metro and micro-edge enabled |
| Renewable Power Sourcing | Optional | Mandatory or PPA-based |
| Contract Flexibility | Fixed 5-year terms | Modular, rapid scale models |
| Interconnect Options | 10G standard | 100G–800G, direct cloud on-ramps |
| Compliance Certifications | SOC 2 only | SOC 2, ISO 50001, HIPAA, PCI DSS |
The New Colo Evaluation Matrix
Must-Haves:
- 30+ kW rack support
- Liquid or hybrid cooling systems
- Carbon reporting and dashboards
- High-bandwidth connectivity (800G-ready)
- ISO, SOC, and ESG-aligned compliance
Red Flags:
- No liquid cooling roadmap
- No green energy plan
- Locked-in long-term contracts
- Claims of “edge” with no partner network
Strategic Questions to Ask:
- Can you collocate AI workloads with renewable power?
- Do you offer modular expansion within 90 days?
- How is tenant-level carbon reporting delivered?
- What telco/CDN/cloud networks are you connected to?
Real-World Examples
Healthcare AI Startup
- Need: HIPAA compliance + GPU density
- Solution: 20 MW cluster in a carbon-neutral colo
- Result: Faster ML with audit-ready infrastructure
Fintech Firm
- Need: ESG compliance + low-latency trades
- Solution: Metro-edge colo with fiber exchange link
- Result: Maintained execution SLAs with carbon alignment
Autonomous Vehicle Company
- Need: Distributed inference + centralized training
- Solution: Edge colos in 20 metros + 200 MW hub
- Result: Balanced scale, performance, and control
Power Is the Bottleneck
Land and fiber are available. Power is not.
Challenges:
- Renewable generation is behind schedule
- Transmission upgrades lag demand
- Substation gear has 2+ year wait times
Operators are responding by:
- Partnering with nuclear and micro-reactors
- Shifting peak loads to off-grid generators
- Securing long-term PPAs before breaking ground
What This Means for Strategy
Infrastructure leaders are adjusting expectations:
- Refresh cycles are down to 18–24 months
- ESG compliance is required-not optional
- Edge orchestration is complex but necessary
- Training vs. inference placement is a board-level concern
Talent is shifting too:
- AI infrastructure engineers
- Sustainability analysts
- Hybrid cloud and edge architects
Frequently Asked Questions
What is a colocation data center?
A colocation data center is a facility where businesses rent physical space for their servers while the provider supplies power, cooling, security, and connectivity.
How are colocation data centers adapting to AI?
They now support high-density racks, liquid cooling, AI leasing models, and cloud adjacency for training and inference workloads.
Is colocation more sustainable than public cloud?
Often yes-if the provider uses renewable power, offers carbon reporting, and manages efficiency. But it depends on design and location.
Why is power so constrained?
Grid capacity has not kept pace with AI-scale demand. Generation, transmission, and distribution are all lagging behind market needs.
What should I ask my colo provider?
Check for high-density readiness, sustainability reporting, edge presence, and rapid deployment capabilities.
Final Takeaway: The Colo Renaissance Is Real
Colocation data centers in 2025 are no longer just secondary infrastructure. They’re the new cornerstone for AI, edge, and sustainability-forward hybrid IT strategies.
Facilities that meet these new demands aren’t stuck in the past-they’re shaping the future of enterprise infrastructure.
Looking to modernize your infrastructure for AI, edge, and ESG demands? Learn how Opus Interactive delivers scalable, sustainable colocation designed for the workloads of tomorrow.Explore our Colocation Services
