What Is a Colocation Data Centre? And Why UK Businesses Are Re-thinking Where Their Data Lives

Find out how colocation is reshaping data strategies and how the right data centre choice can future proof your business. 

Every organisation now runs on data – medical records, financial transactions, and as individuals, we’re all creating content, photos, videos, and a lot more, which needs to be stored somewhere. If you’re a business that handles data, the question isn’t whether you need a data centre; it’s how to choose which option best suits your business needs.

Should you build your own? Costly.

Should you use public cloud platforms such as AWS and Azure? These can be costly too, with long-term contractual commitments.

Or, should you choose colocation? 

A quick definition (no fluff) 

Colocation is simple: you place your own servers and storage in a specialist data centre that provides the building, power, cooling, connectivity, physical security and 24/7 operations. Think of it as a hotel for your IT – there are “executive suites” (private cages/rooms with specific environmental and security controls) and “economy rooms” (shared spaces, separated and secured, where standard workloads sit side-by-side). You still own and control your assets (hardware); the operator delivers the resilient environment. 

Why colocation is winning right now 

  • Control with convenience: Retain complete control of your hosting configuration, while offloading facilities management to experts. 
  • Compliance and trust: Sectors with strict rules such as finance, healthcare, public sector, often need UK hosting and auditable controls. Colocation satisfies UK data sovereignty requirements while maintaining performance. 
  • Hybrid by design: Colocation is a natural anchor for hybrid strategies: keep steady, sensitive, or predictable workloads in colo, burst into the cloud when it’s needed. 
  • Predictability vs. surprises: Businesses repatriating from public cloud cite bill shocks, data egress fees and poor latency as reasons to move some workloads back. Colocation restores cost predictability and locality. 

The demand backdrop 

The world’s data curve is vertical. Over the past two years, we’ve created more data than in all prior human history, and in June 2024 alone an estimated 12 zettabytes were created, for example, video now accounts for ~54% of global traffic. Meanwhile, UK data centres have been designated Critical National Infrastructure (CNI), recognising their crucial role in banking, healthcare and national resilience. 

Where colocation fits with AI 

AI doesn’t eliminate colocation; it refines the mix. Traditional IT racks typically draw 4–10 kW and remain a sweet spot for colocation. High-density AI racks (30 kW today, >100 kW coming) often require purpose-built environments, but AI-enabled enterprise applications are comfortably supported in modern colocation sites. 

Bottom line – colocation lets UK businesses balance sovereignty, resilience and cost control without giving up the agility to use cloud where it excels

If you’d like to hear more from the people shaping the UK’s digital infrastructure, tune in to In Conversation With, our podcast series featuring candid discussions with business and technology leaders. For a deeper dive, explore our latest white papers – designed to help organisations make smarter, future-ready decisions about their data strategies 

If you are looking for colocation in Leeds, click below to book a tour with us.

This is Part 1 of a three-part series by Asanti. Part 2 will tackle “Data Centres: Myths vs. Reality” (power, water, and sustainability), then, Part 3 will explore “Repatriation and the US Cloud Act” – and what it means for UK/EU digital sovereignty. 

Keep an eye out for these and more on our social media.

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