2. With an increase in the number of sophisticated local and international colocation buyers, colo
clients are now starting to ask themselves one very simple question.
“If I need to be in Canada, do I need to deploy my infrastructure in Toronto?”
The fact is that for 90% of clients looking to deploy 10 cabinets or more the answer is no. This then
results in a follow on question. What is the best region for me to deploy my infrastructure?
To answer this question we must ask ourselves what constitutes or characterizes a Tier I market
from a colocation perspective. A major (Tier I) colocation market would require the following criteria:
I know it sounds like a bold claim but the days of Toronto being the number one colocation market
destination in Canada will soon be behind us. If you look at the stats, Toronto has nearly 1 million
sqft of raised floor space, while Montreal has only 186,000 sqft. This delta is surprising when you
look at the size of the population and a number of other important criteria related to a successful
colocation market.
Based on these criteria, the Tier I Canadian markets include Calgary, Montreal, Toronto and
Vancouver. Other secondary markets that may be considered include Ottawa, Winnipeg, Edmonton
and Halifax.
Low electricity costs
Enormous available bandwidth
Low operating costs (space and staff)
Dark fiber availability (diverse paths)
The #1 Colocation Market in CanadaMontreal
Low natural disaster risk
Car and air accessibility
Government incentives
Proximity to businesses with data needs
Criteria / Market Matrix
Criteria Tor Mtl Van Ott Cgy Edm Que Wpg Hfx
N
Y
N
Y
Y
Y
N
Y
5
Y
Y
Y
Y
Y
Y
N
Y
7
Y
Y
N
Y
N
Y
N
Y
5
N
N
N
N
Y
Y
N
Y
3
N
Y
N
Y
Y
Y
N
Y
5
N
N
N
N
Y
N
N
Y
2
Y
N
Y
N
Y
N
N
N
3
Y
N
Y
N
Y
N
N
N
3
N
N
Y
N
Y
N
N
N
2
Dark Fiber
Enormous Bandwidth
Car/Air Accessibility
Low Electricity Costs
Low Natural Disaster Risk
Low Opex Costs
Government Incentives
Proximity to Businesses
Total
ROOT Montreal The #1 Colocation Market in Canada 2
3. Canadian Market Metrics
2011
Population Rank
Market Population
Operational
Square Footage
SqFt/Pop
Ratio
MW kW/Pop
4 Ottawa 1,236,000 53,400 4.3% 6.5 0.53%
2 Montreal 3,825,000 186,000 4.9% 22.8 0.60%
6 Edmonton 1,159,000 39,600 3.4% 3.52 0.30%
1 Toronto 6,245,000 971,000 15.5% 144.9 2.32%
5 Calgary 1,214,000 191,200 15.7% 16.7 1.38%
3 Vancouver 2,483,000 107,000 4.3% 14.7 0.59%
Assuming world class colocation facilities with adequate supply in each of these markets, what are
the driving factors enabling these decisions? Based on a recent compilation of purchasing decisions
and RFPs in the Canadian market, here are the most common criteria: colocation service price,
accessibility to price conscience telecommunication facilities, expansion capacity capabilities, low
risk market/location selection and eco-conscience status.
According to 451 Research, the Montreal MTDC market is relatively small considering the sizeable
population. Include the fact it’s the second largest financial market in Canada, a manufacturing
powerhouse, its proximity to the US East Coast and European markets and has a very competitive
electrical supply rate one would expect to see end users from Canada, US and globally, looking more
closely at Montreal as an ideal market to locate their IT infrastructure.
Based on Table 2 ratios, one would expect to see the sqft and kW ratios to more closely resemble
Toronto and Calgary. As more modern high density facilities come online in Montreal, colocation
clients will benefit from competitive pricing in these new facilities. With their more efficient
designs, existing clients seeking to expand or renew, or new entrants looking for a North America
presence will both benefit as the Montreal market continues to ascend in the ranking of operational
square footage and MW of capacity available.
ROOT Montreal The #1 Colocation Market in Canada 3
4. Tier 1 Market Comparison
Future Outlook on Electricity Cost
Criteria Toronto Montreal Vancouver Calgary
Geographic Risk None None Seismic None
High Traffic International Airport Yes Yes Yes Moderate
Green Electrical Utility No Yes Yes No
Competitive Colo Pricing Rank 2 Rank 1 Rank 3 Rank 4
Overall Rank 2 1 3 4
Pricepoint
- Cost of utility power ($/kwhr)
- Cost of real estate ($/sqft)
+90 - 130%
0.126
15 - 20.00
Baseline
0.042
8.5
+100%
0.080
13 - 18.00
+100 - 150%
0.110
15 - 30.00
Connectivity: International
- Direct, Diverse Access to US
- Ample Low Cost Internet Transit
Rank 1 Rank 1 Rank 1 Rank 2
Connectivity: Inter-city
- Access to Fiber Right of Way
- Competitive Landscape for Dark Fiber
Rank 2 Rank 1 Rank 2 Rank 2
Note: Other primary criteria such as Security and Uptime are consistent across these markets thanks to
certification standardization through PCI/SSAE 16/CSAE 3416 and the Uptime Institute.
*based on gross rental rates for industrial properties outside the downtown core
The analysis demonstrates Montreal’s robust infrastructure and aggressive pricing makes the
market ideally positioned for 10+ cabinet deployments. Combined with a now stable political
environment and new capacity being built in Montreal, consumers of data center space will no
longer have to look outside the Montreal market due to supply issues.
In Canada, electricity rates are regulated by the provinces. The graph below, courtesy of Ontario
Hydro, demonstrates the advantageous position the provinces of Quebec, Manitoba and BC are
in with respect to the high energy use colocation industry. The reason these 3 provinces are able
to produce sustainably lower rates is based on their source of electricity – hydro generation. With
the impending coal and nuclear plant retrofits on the horizon in non-hydro generated jurisdictions,
electricity production costs will be under tremendous pressure as the aging production requires
replacement or overhaul.
ROOT Montreal The #1 Colocation Market in Canada 4
5. 169
158
146
135
124
113
101
90
79
68
56
45
34
23
11
0
Quebec
1,000kW/h
Manitoba
BritishColumbia
NewBrunswick
Alberta
NewFoundlandLabrador
Saskatchewan
Ontario
NovaScotia
PrinceEdwardsIsland
Another key factor to understand why Montreal might displace Toronto as the go to colo market in
Canada has to do with the recent and projected electricity rate increases in the province of Ontario.
With the latest scheduled increase on May 1, 2014, the Ontario electricity rates have gone up 65% in
the past 8 years. In addition, power rates are projected to rise by an additional 40% over the next 48
months. For large power consumption industries, like colo, the current trajectory for rates in Ontario
will negatively impact their competitive positioning.
To schedule an online consultation to discuss the results of the Montreal colocation report please
submit your request to marketreport@rootdatacenter.com
ROOT Montreal The #1 Colocation Market in Canada 5
Average Electricity Bill by Province
