Exploring the State of Data Centres in Canada: Market Growth and Trends

The state of data centres in Canada is evolving rapidly, fueled by growing demand for cloud services and data storage. This article explores the current market size, key trends, major operators, and technological advancements shaping the industry. Gain insights into how Canada is positioning itself as a leading data centre hub and what this means for the future.

Key Takeaways

  • The Canadian data centre market is experiencing rapid growth, with an anticipated market value of $9.04 billion by 2029, driven by cloud services, IoT, and big data.
  • Key investment hubs like Toronto, Montreal, and Vancouver are attracting significant investment from global cloud providers, bolstered by sustainable energy sources and next-gen infrastructure.
  • Despite the robust market growth, challenges such as power constraints, rising land prices, and competitive real estate markets in key cities pose significant barriers to expansion.

Exploring the State of Data Centres in Canada: Market Growth and Trends

Illustration of data center servers and technology

The Canadian data centre market is riding a wave of exponential growth, propelled by the relentless surge in cloud services, the insatiable appetite for data storage, and the onslaught of technological advancements reshaping the digital domain. Imagine a market poised to nearly triple in value, with a projected Compound Annual Growth Rate (CAGR) of 10.26% from 2023 to 2029, culminating in a staggering market value estimation of $9.04 billion by 2029. This rapid expansion is not just a testament to Canada’s growing digital economy but also a beacon for global investors seeking fertile ground in the data center colocation market.

The landscape of Canadian data centres is a mosaic of innovation, with the size of the market estimated at a robust 754.58 million USD in 2023. Vantage Data Centres LLC stands tall with a commanding market share of 22.7%, but they are not alone in this race. The engines driving this growth are multifaceted, fuelled by:

  • the increasing adoption of cloud-based services
  • the burgeoning demand for data storage
  • the relentless expansion of the Internet of Things (IoT), cloud computing, and big data

These forces converge to create a groundswell of opportunities, setting the stage for a vibrant and competitive Canada data center market.

Introduction

Data centres have evolved from mere storage facilities to become the critical nuclei of the digital age, offering:

  • secure and scalable environments where data is not just stored but also managed and disseminated with precision
  • the ascendancy of cloud services and the burgeoning needs for data storage have expanded the role of data centres, intertwining them with the very fabric of our digital existence
  • as the nexus of connectivity and innovation, they are the repositories of our digital identities, the custodians of our online interactions, and the enablers of the cloud computing revolution.

In this exploration, we delve deep into the Canadian data centre market, unraveling the threads that weave together its growth, emerging trends, and the various factors influencing this dynamic sector. Relying on transparent research methodology and an in-depth industry analysis, our odyssey traverses through the intricacies of the market, from the robust shell development installation to the intricate details of the business overview. The transformative impact of data centres on businesses and consumers alike cannot be overstated – they are the bedrock upon which the digital landscape is built.

Current Market Overview

Illustration of cloud computing and data storage

The canvas of the Canadian data centre market is painted with broad strokes of growth and potential. As of 2023, the market size was a testament to the sector’s robustness, with a valuation of 754.58 million USD, and is projected to balloon to a massive 9.04 billion USD by 2029.

The fertile ground of this market has seen a seed of investments that is expected to sprout into a towering 9.04 billion USD by the end of the forecast period, growing at a formidable CAGR of 10.26% from 2023 to 2029. This trajectory is not just a reflection of growth but a narrative of the demand and supply aspects that underscore the comprehensive analysis of the business overview.

Driving this expansion are the key pillars of the digital revolution – cloud services, IoT, and big data. The imminent deployment of 5G networks across the Canadian landscape is anticipated to inject even more vigor into the market, necessitating high-bandwidth networking infrastructure to support the burgeoning digital economy. As we dissect the vendor landscape and discuss market sizing, the insatiable higher demand for data center services becomes increasingly apparent, charting a course of sustained growth and innovation.

Key Investment Opportunities in Canadian Data Centres

The map of investment opportunities in the Canada data center market is dotted with key locales, with the bustling metropolises of Toronto and Montreal shining as beacons of significant investment from global cloud providers and data centre operators.

The recent announcement by AWS to inaugurate its new AWS Canada West (Calgary) Region, backed by an impressive investment plan of around USD 18 billion by 2037, exemplifies the magnitude of opportunities in the landscape. The seismic entry of KDDI (Telehouse) into the Canadian market, with an investment that breaches the billion-dollar mark, echoes the allure that the Canadian data centre colocation market holds for key investors.

Equinix, Cologix, eStruxture Data Centres, Digital Realty and Urbacon Data Centre Solutions are among the illustrious names expanding their portfolios within Canada’s borders, underscoring the nation’s increasing significance in the data centre investment sphere.

With such significant investment pouring into data storage and cloud-based services, the Canada colocation market revenue is poised to swell, bolstered by the strategic moves of these prominent IT infrastructure providers. The narrative of Canada as a hub for data centre services is one characterized by a confluence of technological prowess and visionary investment.

Existing and Upcoming Data Centre Facilities

Artistic depiction of Canadian data centre facilities

The landscape of Canada data centers is a dynamic one, with the existing and upcoming facilities painting a picture of a market in constant evolution. Home to approximately 117 operational colocation data centers, Canada is a bastion of data storage and services. With 124 data centres and 30 data cenrer providers calling it home, the nation is a fertile ground for data centre operators and infrastructure providers alike. The majority of these facilities are constructed to meet the rigorous Tier III standards, ensuring robust infrastructure and reliability.

The cities of Toronto, Vancouver, and Montreal are the primary hubs, pulsating with the activities of existing and upcoming facilities that cater to the growing demands of the Canada data centre market.

The launch of the new AWS Canada West (Calgary) Region is a pivotal moment, offering customers an array of options to run their workloads with enhanced resilience and availability while securing their data within Canadian borders and serving end-users with reduced latency.This is further supported by Microsoft’s plans to infuse USD 500 million into the establishment of several new data centres in Quebec City by 2025, indicative of the significant growth trajectory of the market.

Infrastructure and Technological Advancements

Illustration of sustainable infrastructure and technological advancements

The infrastructure and technological advancements within Canadian data centres are a testament to the nation’s commitment to innovation and sustainability. Many facilities have embraced the mantle of sustainability, integrating renewable energy sources into their operations to power the future of data storage. In British Columbia, the lush landscape is not only a backdrop for natural beauty but also a powerhouse of hydropower, contributing over 98% of clean, renewable energy—a boon for data centres seeking eco-friendly operations.

Artificial intelligence (AI) algorithms are revolutionizing Canadian data centres in the following ways:

  • Optimizing energy efficiency by dynamically managing resources and cooling systems with precision
  • Enabling data centres to forecast potential equipment failures through predictive analytics, allowing for proactive maintenance and minimizing downtime
  • Reshaping how resources are allocated through AI-driven workload management, ensuring data centres can respond quickly and scale effortlessly to meet the rising demand.

Prominent Data Centre Operators and Providers

A constellation of prominent data centre operators and providers illuminate the Canadian landscape, each playing a pivotal role in the market’s growth trajectory. Leading the charge are:

  • Cologix
  • Equinix
  • Digital Realty
  • eStruxture Data Centers
  • Urbacon Data Centre Solutions
  • Vantage Data Centers

Each of these operators contributes their unique strengths and capabilities to the Canada data centre market. These global operators, along with enterprise operators, are not merely participants but are architects of the advanced infrastructure that underpins Canada’s data centre services.

These key players, also known as support infrastructure providers, engage in a continuous dance of expansion and innovation, extending the reach of their cloud computing services and infrastructure servers. Their investments in the market not only underwrite the present but also pave the way for a future rich with cloud-based services and big data capabilities. As they fortify their positions within the Canadian market, they are also setting the stage for a new era of managed hosting and colocation services that will serve as the backbone for the digital economy.

Regional Analysis of Canadian Data Centres

The regional analysis of Canadian data centres reveals a vivid tapestry of strategic advantages and contributions from key regions, each infusing the market with its unique flavour. Toronto, Montreal, and Vancouver stand out as primary hubs, offering a range of benefits from high connectivity and market dynamics to renewable energy sources and business-friendly environments.

These strategic regions serve not just as physical locations but as hubs of innovation and growth for the Canada data centre market, attracting data centre operators and investors operating with an eye towards the future.

Toronto

Toronto, Canada’s largest financial centre, is a linchpin in the nation’s data centre market, offering a blend of high connectivity and proximity to key markets that are magnetic for operators and investors alike. The city’s data centre market is buoyed by substantial investments from global cloud titans such as Microsoft, Oracle, and AWS, each vying to capitalize on the region’s significant market dynamics and robust Canada facilities.

Toronto’s strategic importance is further solidified by its recognition as a major data centre hub, a testament to its infrastructure, strategic positioning, and the plethora of opportunities it presents within the Canada data centre market.

Montreal

Montreal’s allure in the data centre sector is undeniable, with its strategic positioning and connectivity advantages positioning it as a key focus area for investments. Its prime geographical location not only ensures seamless connectivity but also provides low-latency network access to both North American and European markets, a crucial factor for data centre services. The city’s advantages include:

  • Advanced digital infrastructure
  • Stringent data security standards
  • State-of-the-art data centres equipped with the latest technology
  • Robust cybersecurity measures

These factors have rendered Montreal a top-tier colocation destination.

The city’s green, low-cost hydroelectric power is a magnetic pull for hyperscale operators, further fueling interest in Montreal’s data centres. However, the city’s data centre market is tightening, hinting at a more challenging and potentially costly landscape for new entrants in the future. This makes the city’s existing Gatineau data hub and other Canada facilities all the more valuable within the broader context of the Canada data centre market and the data centre colocation market at large.

Vancouver

Vancouver’s data centre market is burgeoning, underpinned by the region’s commitment to sustainability and the use of clean, renewable hydroelectric energy sources. The availability of such environmentally friendly power sources provides significant infrastructural support, positioning Vancouver as a burgeoning hub within the Canada data centre market.

The region’s benefits are not limited to power—its dedication to renewable energy helps data centres to operate sustainably, significantly reducing their carbon footprint and aligning with global initiatives to combat climate change.

Challenges and Restraints

While the Canadian data centre market burgeons with potential, it is not without its challenges and growth restraints. Montreal, in particular, grapples with power constraints and protracted timelines for power delivery, a consequence of high demand from industries with sizeable power requirements. These constraints are further exacerbated by the rising land prices in prime locations like Montreal and Toronto, which are compelling data centre operators to consider alternative cities such as Calgary and Quebec City for future developments.

Toronto’s challenges are compounded by the scarcity of available land sites and a fiercely competitive real estate market. The city’s low industrial vacancy rate of just 0.7% has resulted in a sharp escalation of land prices, presenting a formidable barrier to data centre expansion. Moreover, the competitive pace of the real estate market often outstrips the ability of data centre developers to close deals, with many transactions closing in as few as 30 to 60 days, while data centres require at least 90 days. This creates a high-stakes environment where timing is as critical as location.

Future Outlook and Predictions

Peering into the crystal ball of the Canadian data centre market, the future is marked by bright prospects and transformative trends. Here are some key points to note:

  • Investments are projected to reach a staggering USD 9.04 billion by 2029, with a healthy CAGR of 10.26% from 2023-2029, reflecting a market ripe with opportunity and growth.
  • The proliferation of cloud-based services in Canada is driving the establishment of cloud regions by heavyweight providers like Microsoft, Oracle, Google, Amazon Web Services, and Tencent Cloud.
  • This move will undoubtedly fuel the market’s upward trajectory.

The advent of 5G networks in Canada is set to spur demand for high-bandwidth networking infrastructure, further bolstering the digital economy and paving the way for the rise of smart city initiatives. These initiatives are likely to drive the adoption of Software Defined Networking (SDN) across the nation, fostering innovation and connectivity within the Canada data centre market.

As the digital landscape evolves, so too will the data centres that support it, adapting to the emerging needs of a world increasingly reliant on data and connectivity.

Checklist for Evaluating Data Centre Providers

Artistic representation of data centre security measures

In the realm of data centres, not all providers are created equal, and the discerning customer must navigate a labyrinth of considerations to align with the right partner. At the top of this checklist is the evaluation of power capacity and cooling systems, which form the lifeblood of any data centre operation. Some key factors to consider include:

  • Redundant systems for emergencies, including backup power sources, to ensure continuous uptime and data integrity.
  • Efficient cooling systems to prevent overheating and maintain optimal operating conditions.
  • Scalability and flexibility of power and cooling infrastructure to accommodate future growth and changing needs.

By carefully evaluating these factors, you can choose a data centre provider that meets your specific requirements and provides a reliable and efficient environment for your data.

Equally pivotal are the security measures in place to safeguard the heart of your digital operations. Physical security like surveillance and multi-tiered access controls must be complemented by cutting-edge AI