Colocation in the U.S.: A Growing Strategic Priority
The United States is one of the most developed data centre markets in the world, yet demand continues to surge. By the end of 2024, the total primary data centre capacity under construction had reached a record 6,350 megawatts (MW), more than doubling the previous year’s pipeline of 3,077 MW. This is driven by a combination of factors: digital transformation across industries, the growing appetite for AI and cloud workloads, and the increasing need for resilient infrastructure amid power and space constraints in core markets.
New York City stands out as a strategic colocation destination—not just for its scale, but for its unique positioning in North America’s digital ecosystem. As a dense metro with key fibre routes, submarine cable landing points, and proximity to global financial, tech and healthcare players, it continues to be a prime choice for businesses seeking reliable, high-performance infrastructure.
Why New York? The Strategic Appeal of the Northeast
New York is consistently ranked among the top five data centre markets in the U.S., and for good reason. Its dense concentration of enterprise headquarters, particularly in finance, media, telecommunications and healthcare, means that digital infrastructure must be fast, available, and always on.
Colocation in New York offers direct access to major east coast and transatlantic fibre routes. The city serves as a major aggregation point for international traffic—especially for businesses looking to connect with partners in London, Frankfurt, or Amsterdam via subsea cables. Proximity to Wall Street and other financial hubs also makes latency-sensitive colocation a necessity for capital markets firms.
Another key benefit is diversity of network providers. Carrier-neutral facilities in Manhattan offer access to hundreds of networks, IXPs, and cloud on-ramps. This makes it possible for businesses to build highly resilient, low-latency infrastructure within a tightly interconnected ecosystem.
The Impact of Risk, Resilience, and Regulation
New York’s appeal isn’t solely about proximity and performance—it’s also about risk mitigation. Recent years have underscored the critical need for robust IT continuity strategies. Events such as the COVID-19 pandemic, which disrupted global supply chains and forced a sudden shift to remote operations, and extreme weather events like Winter Storm Elliott in 2022, which caused power outages across large parts of the U.S., have highlighted vulnerabilities in digital infrastructure planning.
In particular, the increasing frequency of climate-related disruptions—ranging from severe heatwaves to unexpected flooding in urban centres—has prompted many organisations to rethink their IT environments. In response, enterprises are migrating mission-critical systems to professional colocation facilities that offer higher standards of uptime, multi-layered redundancy, and disaster recovery support.
These facilities are specifically designed to mitigate operational risk through hardened infrastructure, backup power systems, and direct interconnection to key cloud and carrier ecosystems—making them a strategic choice in an era where physical disruption is no longer a rare event, but an ongoing risk.
Colocation vs. On-Premise: Making the Right Decision
A growing number of enterprises are choosing colocation over building or maintaining their own on-premise data centres. The reasons are both financial and strategic. From a cost perspective, colocation eliminates upfront capital expenditures, allows for more predictable operational costs, and shifts maintenance responsibilities to specialist providers. From a business agility standpoint, colocation offers faster deployment, better scalability, and direct access to a wide range of connectivity partners.
New York’s colocation ecosystem supports a variety of use cases, including:
- Edge deployments for low-latency services
- Interconnection hubs for global carriers and CDNs
- Hybrid cloud enablement for enterprise IT teams
- Disaster recovery sites close to key metro areas
When evaluating options, businesses should consider factors like power availability, carrier density, compliance standards, location relative to their user base, and the ability to interconnect with partners across the U.S. and globally.
| Criteria | Colocation | On-Premise Data Centre |
| Initial Capital Investment | Low – Pay-as-you-go model with no need for facility buildout | High – Requires full infrastructure investment (building, cooling, power, etc.) |
| Operational Costs | Predictable monthly fees, shared maintenance costs | Unpredictable – high ongoing costs for power, cooling, maintenance, staff |
| Deployment Speed | Fast – Infrastructure is ready to use | Slow – Requires time to build, configure, and secure |
| Connectivity Options | High – Access to hundreds of carriers, ISPs, and IXPs | Limited – Dependent on in-house network arrangements |
| Scalability | Flexible – Add or reduce footprint easily | Difficult – Scaling often requires major capital and physical space |
| Disaster Recovery | Built-in – Facilities offer redundancy, backup power, and disaster planning | Risk-prone – Disaster planning is organisation’s responsibility |
| Security & Compliance | Managed – Facilities are certified (e.g., ISO 27001, SOC 2) and monitored 24/7 | Requires in-house security protocols and audits |
| Support & Monitoring | 24/7 onsite support, network monitoring, remote hands available | Depends on internal IT resources |
| Energy Efficiency | Designed for efficiency and shared resources | May be less efficient and harder to optimise |
| Ideal For | Enterprises needing rapid scale, global connectivity, hybrid cloud, DR sites | Large institutions requiring full control, long-term in-house infrastructure |
Trends Shaping the Future of Colocation in New York
Several key trends are driving the next phase of growth in New York’s colocation market:
- Artificial Intelligence (AI) and Machine Learning (ML) are increasing demand for high-density racks, GPU clusters, and advanced cooling systems—all of which are more efficiently deployed in purpose-built colocation facilities.
- Cloud interconnectivity is becoming central to enterprise IT. Many organisations are looking for data centres with direct access to public cloud platforms via services like AWS Direct Connect or Microsoft Azure ExpressRoute.
- Sustainability is also rising on the agenda. Facilities that invest in energy efficiency, green power sourcing, and reduced carbon emissions will have an edge as enterprises look to align IT infrastructure with ESG goals.
- Remote work and decentralised operations are driving demand for smaller, edge-ready deployments close to users. New York’s role as a population-dense business hub makes it a prime location for edge computing and latency-sensitive applications.
A Closer Look: 60 Hudson Street’s Legacy of Connectivity
No discussion of New York colocation is complete without mentioning 60 Hudson Street. Often referred to as one of the most connected buildings in the world, this Lower Manhattan carrier hotel is home to hundreds of networks, service providers, and cloud platforms. Its vertical fibre risers and dense cross-connect infrastructure make it a favourite for enterprises that need scalable, low-latency access to regional, national and global partners.
For businesses looking to establish a colocation footprint in New York, facilities within or directly connected to 60 Hudson Street offer a unique advantage—proximity to financial exchanges, cloud on-ramps, and Tier 1 carriers, all under one roof.
Conclusion: Building a Future-Ready Infrastructure in New York
Colocation in New York City offers a compelling value proposition. Whether you’re a global enterprise seeking international reach, a financial services firm needing ultra-low latency, or a cloud-native company looking for flexible edge deployments, the city provides the infrastructure and interconnection density to meet those needs.
New York continues to lead as a gateway to North America’s digital economy—making it the ideal location for high-performance, interconnected colocation. Epsilon’s New York facility at 60 Hudson Street offers secure, scalable hosting and a rich ecosystem of networks, clouds, and IXPs. Paired with our Infiny platform, we enable you to deploy, manage, and interconnect across continents on demand. Whether you’re supporting edge deployments, disaster recovery, or global expansion, Epsilon helps you move faster and stay connected.
Talk to our specialists about how Epsilon Colocation in New York can power your business in the world’s most connected market.
