While the traditional focus for wholesale colocation has long been centered on bustling Tier 1 data center hubs, a significant and often unexpected success story is unfolding in Tier 2 markets. These secondary locations, previously considered less central, are rapidly gaining traction and presenting compelling opportunities for businesses seeking data center space.
Several factors contribute to this shift. Rising costs and increasing infrastructure constraints in prime Tier 1 locations are pushing companies to explore alternatives. Tier 2 cities frequently offer more readily available power and land, often at a lower price point, leading to substantial operational cost savings. Furthermore, the increasing need for digital transformation and faster content delivery closer to end-users is driving demand for edge data center solutions, making regional Tier 2 locations strategically valuable.
Companies finding success in these markets include content providers, cloud service extensions, and enterprises requiring regional presence. The growth isn’t just about cost; it’s also about reaching new customer bases and leveraging improving fiber connectivity that now extends robust networks beyond major hubs. The competitive landscape in Tier 2 markets can also be less saturated, potentially offering better terms and service flexibility.
Identifying the right Tier 2 market involves assessing power availability, fiber density, regulatory environments, and local skilled labor pools. However, the evidence is clear: overlooking these secondary locations means missing out on a vibrant and growing segment of the wholesale colocation industry. The market is evolving, and success is increasingly being found by looking beyond the most crowded areas.
Source: https://www.datacenters.com/news/wholesale-colocation-in-tier-2-markets-the-unexpected-winners
