What's next for the Montreal data center market?

What’s next for the Montreal data center market?

The Montreal data center industry has known an amazing success in the last 4 years. Now that all hyperscalers (Google, AWS, IBM, Microsoft and more recently, Oracle) have deployed data centers in the region, we can ask ourselves, what’s next?

Let’s be real, other than the important RFP from Oracle we had in late 2019, not many big deals have been done in the last year. Some say that the market is slowing down and it will stay that way. We, at Montreal Colo, think in a differently.

The status of the hyperscalers

AWS Canada Data Center
Hyperscale AWS data center in Varennes (Montreal area)

First thing first, we have to address the status of the hyperscalers. After all, it’s their presence that has made the market actually solid.

It’s amazing that all the major hyperscalers have deployed important data centers in Montreal. We are not talking about small network POPs, but about true multi-megawatt data centers. Some in colocation facilities, other in powered-shells. Even if these data centers are massive, we can also expect some growth. AWS has been adding megawatts of IT load on a monthly basis and Google has been growing a bit as well.

A big question that many people have is if we can expect other hyperscalers like Salesforce of Facebook to join the market. From our sources, we doubt that Facebook would make such a move. Facebook is quite unique in its network and data center choices and most likely won’t since the amount of population in the area is too small in their eyes (even if you can reach 70%+ of Canada’s population from Montreal).

Back to the current hyperscalers in the market, we can’t really tell if they will keep growing in the colo space or building their own data centers like AWS has done with Montoni in Varennes, but time will tell. We have to admit that on such a scale, it makes sense to have your own facility since you still benefit from the cool climate and the green power that is present in Montreal in both cases.

Whats next for the market

montreal map
Map of the region of Montreal

Now that hyperscalers are well implemented into the market and are happy about it, what’s next? Our bet is that slowly but surely, the Fortune 500 range of companies that have important IT needs will finally catch-up about the news on what makes Montreal the best market in the world for data centers.

Give it 2-5 years, some major colocation contracts in Ashburn will come to expiry and open-minded companies that are searching to reduce their operating costs and carbon footprint will most definetly consider a data center in Montreal.

Montreal will most likely never replace Ashburn as some workloads are very latency-sensitive. Although Montreal as low latency to the US, sometimes even a few milliseconds is too much and it is not much you can do about that. Also, Ashburn is indeed closer to many more people.

A perfect use case that we see for US companies to benefit from the Montreal data center market is moving their backup infrastructure. Either for the performance of operational reasons, we understand that it is not always possible to move outside of the US the main production, but disaster recovery and backup sites are prime candidates to be installed in Montreal.

Don’t expect multi-megawatt deals in this category, but 100-500 KW deals are nothing to laugh about. Even the smallest quantity of IT that is moved from Ashburn to Montreal represents that much less carbon footprint associated with the IT industry.

Be patient, it’s going to explode

We definitely feel like colocation providers are slowly getting stressed out by the reduced demand that we have seen in the last year. Our word on that would be to calm down and be patient. It is not easy when you have invested hundreds of millions of dollars into a facility and you are waiting for tenants, but pushy sales reps only cool down leads and market interest. Be proud and humble about the Montreal market, and deals will come.

What are your predictions for the Montreal colocation data center market? Let us know on Linkedin !

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