Wholesale colocation: pricing, contracts and provider selection
Wholesale colocation is the leasing of large blocks of data center capacity, typically from about 250 kW up to entire multi-megawatt halls or buildings, to a single tenant under a long-term contract. Tenants are usually hyperscalers, large SaaS companies, or GPU cloud providers who fit out and operate the space themselves. Leases run 5-15 years and are priced per kW per month, often on a triple-net basis where the tenant pays metered power separately. In H2 2025, CBRE reported average North American wholesale asking rates of about $196 per kW/month for 250-500 kW requirements, up 6.6% year over year, with 3-10 MW deals rising even faster amid record-low vacancy.
How to compare wholesale colocation offers
Wholesale colocation is bought as committed power and dedicated space rather than as a standard rack bundle. The commercial comparison therefore starts with the same IT-load profile, density, redundancy and ramp schedule for every provider. A low headline rate is not comparable if one quote excludes metered energy, cross-connects, fit-out, remote hands or annual escalation.
Normalize every proposal to a monthly cost per committed kW, then model the full contract term. Separate recurring capacity charges from electricity pass-through, one-time build costs and tenant-funded equipment. Confirm which party owns the fit-out at expiry and which decommissioning obligations survive termination.
Worked example — assumptions, not a market quote: a 1,000 kW commitment at $100/kW/month creates a $100,000 monthly capacity charge. If average IT usage is only 600 kW, that fixed charge alone is $166.67 per used kW, not $100. A lower headline rate can therefore cost more than a smaller commitment while your deployment ramps.
For a hypothetical 30-day month, 600 kW average IT load × 720 hours × a contractually applied PUE of 1.4 × $0.10/kWh equals $60,480 in energy charges. Together with the example capacity charge, that is $160,480 before connectivity, services, taxes and one-time costs. Use the actual billing meter, tariff and loss-factor terms: do not multiply by PUE again when facility energy is already metered or included.
For the decision sheet, keep three quantities separate: contracted capacity, capacity accepted as ready for service, and actual average IT draw. Ask when billing starts for each phase, what evidence demonstrates delivery, and what happens if either the operator or your equipment rollout is late. Repeat the calculation for the expected ramp and a slower-demand case before signing.
Capacity and ramp
Committed kW at start, expansion rights, density limits and the price applied to reserved future capacity.
Power economics
Capacity charge, metered energy tariff, PUE or loss factor, utility pass-through and any operator markup.
Space and fit-out
Cage, suite or hall scope; busway, containment, cabling and commissioning responsibilities.
Contract exposure
Initial term, escalation, renewal cap, take-or-pay floor, assignment rights and early-termination schedule.
Operations
SLA credits, maintenance windows, remote-hands rates, security process and reporting cadence.
Wholesale colocation buyer checklist
- Issue one load profile and pricing schedule to every shortlisted operator.
- Request recurring and non-recurring charges as separate line items.
- Model the base, expansion and downside cases across the full lease term.
- Verify power availability, delivery date and redundancy against written evidence.
- Document the ready-for-service acceptance test and the billing start date for each capacity phase.
- Show cost per committed kW and per average used kW separately; never compare different denominators.
- Compare the exit, renewal and decommissioning clauses before comparing discounts.
Wholesale colocation FAQ
Do wholesale customers pay only for the power they use?
Not necessarily. A capacity charge can apply to the committed power block even when actual IT usage is lower. Metered electricity may be a separate charge. Check the take-or-pay floor, phased billing dates, meter boundary and whether any PUE or loss factor is already included before calculating the monthly bill.
What is wholesale colocation?
Wholesale colocation is dedicated data center capacity leased in large power blocks, commonly from hundreds of kilowatts to multi-megawatt halls. Pricing and contracts are structured around committed IT load, space, energy and a long-term operating scope rather than a standard per-rack bundle.
How is wholesale colocation priced?
Quotes commonly separate a monthly capacity charge per committed kW from metered electricity, one-time fit-out, cross-connects and operating services. Buyers should normalize all recurring and non-recurring charges over the same contract term.
What should a wholesale colocation RFP include?
It should define the load profile, density, redundancy, ramp schedule, network requirements, delivery date and compliance scope, then require separate pricing for capacity, energy, fit-out, connectivity, services, escalation and exit obligations.
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