Wholesale vs Retail Colocation: How to Choose

Wholesale colocation is capacity leased in bulk, from a few hundred kilowatts to whole data halls, on a long term, with the tenant running most of what happens inside the space. Retail colocation is cabinets and cages bought by the kilowatt or the rack on shorter terms, with the operator's cross connects, remote hands, and bundled services around them. The line between the two is a range, not a number, and many buyers searching for wholesale colocation providers turn out to need a large retail cage or a hybrid of the two. This guide sets out where the line falls, how the pricing and the lease differ, who buys which, and which providers sell each, so you can scope the requirement before the first operator call.

What is wholesale colocation?

Wholesale colocation is a lease on a large block of data center capacity: a private suite, a full data hall, or a whole building, measured in megawatts rather than racks. The tenant commits to a power capacity for the term, pays a base rent per kilowatt per month for the space and the infrastructure behind it, and pays for the electricity it actually draws on top, usually at the operator's cost plus a factor for cooling. Terms run long, typically five to fifteen years, with annual escalators written in.

What the tenant takes on is the other half of the definition. In a wholesale deal the operator delivers power, cooling, security, and the building. The tenant brings its own racks, its own network, its own on site staff or contracted hands, and its own operating procedures. Some wholesale space is delivered as a powered shell the tenant fits out; some arrives as a turnkey hall with cooling and power distribution installed. Either way the buyer is operating a data center inside someone else's data center, which is why wholesale is sold to companies that already have that capability.

What is retail colocation?

Retail colocation is the product most businesses mean when they say colocation: one cabinet, a row of cabinets, or a caged area inside a shared data hall, sold per cabinet or per kilowatt with a committed power allocation, on terms of one to five years. The operator runs everything outside your rack. Cross connects to carriers and cloud on ramps are ordered from the operator, remote hands reboot and swap equipment on request, and the service level agreement covers power and cooling to your footprint.

Retail is priced as a bundle, and the bundle is what you are comparing. Our guide to colocation pricing walks through how the number is built. The short version is that retail in major North American markets runs roughly $120 to $250 per kilowatt per month, a typical cabinet with its power lands somewhere around $700 to $2,000 a month all in, and cross connects add typically $100 to $300 a month each. Those figures include the operations a wholesale tenant has to supply for itself.

Where the line falls, in kilowatts

There is no official threshold. The ranges below describe how the market behaves, not a rule anyone enforces. Below about 100 kilowatts, roughly a dozen to twenty cabinets at typical densities, the requirement is retail everywhere. Between about 100 and 250 kilowatts it is still retail, but as a caged deployment with its own power distribution, and the pricing starts to move with negotiation rather than a rate card. From roughly 250 kilowatts to one megawatt the two models overlap: a large retail cage and a small wholesale suite are both real answers, and the better one depends on the term you will sign and the operations you will supply. Above one megawatt the market treats the requirement as wholesale, and the conversation changes from cabinets and cross connects to power delivery dates, ramp schedules, and escalators.

The brokerage data tracks the same shape. CBRE's North America Data Center Trends H1 2026 report quotes asking rents only from 250 kilowatts up, in four size tiers: 250 to 500 kilowatts, 500 kilowatts to 3 megawatts, 3 to 10 megawatts, and above 10 megawatts. In the first half of 2026, asking rents in the primary markets rose 4.3 percent in the smallest of those tiers, 7.9 percent for 500 kilowatts to 3 megawatts, 8.3 percent for 3 to 10 megawatts, and 6.7 percent above 10 megawatts. The tiers where mid size wholesale deals live are the ones moving fastest.

How wholesale and retail pricing differ

The per kilowatt base rent in a wholesale lease is usually lower than retail per kilowatt in the same market, because the tenant is buying in bulk, committing for longer, and supplying the operations that retail bundles in. Add the metered power bill, the fit out, and the staff, and the all in cost per kilowatt narrows. For a company without a data center team it can invert. Wholesale is cheaper per unit, not necessarily cheaper.

The market is moving the number more than the model is. CBRE recorded primary market vacancy at a record low of 1.4 percent in the first half of 2026, down from 1.6 percent a year earlier, with 80.4 percent of the capacity under construction already committed before it opens. Its midyear outlook expects average asking rents for 250 to 500 kilowatt requirements to sit above $215 per kilowatt per month in 2026, with larger requirements priced case by case and pricing pressure felt across the size spectrum. For a buyer, that means capacity is sold before it is built, power delivery dates set the timeline, and a longer term is now rate protection rather than a concession.

Lease terms, and what you take on

Three clauses separate the two leases in practice. Term and escalators: a retail agreement runs one to five years and renews at then current rates, which our pricing guide covers in its renewal section; a wholesale lease runs five to fifteen years with a fixed annual escalator, and a seemingly small annual step compounds into a material share of the total cost over a ten year term. Power commitment and ramp: a wholesale tenant commits to a capacity and often negotiates a ramp schedule, paying for a fraction of the block in the first year and the full block later; a retail tenant commits to a smaller allocation with an expansion option. Operations and service levels: the retail agreement covers power, cooling, and the operator's services to your footprint; the wholesale agreement covers power and cooling to the suite, and everything inside it, from rack installation to overnight hands, is the tenant's own contract to write.

A wholesale lease also carries obligations a retail buyer never sees: restoration of the space at exit, insurance and security requirements for the suite, utility pass through terms, and sometimes a share of the building's capital costs. These are not reasons to avoid wholesale. They are reasons to have counsel and an operations lead read the lease, which a company below the overlap zone usually does not need to budget for.

Who buys wholesale, and who buys retail

Retail fits the business consolidating a server room or two, the mid market company that wants recovery in a second region, and any deployment where the network adjacency inside the building is the point. It also fits companies far larger than that whose footprint happens to be small: a bank with a few cabinets next to an exchange is a retail buyer with a large balance sheet.

Wholesale fits companies whose requirement is measured in megawatts and whose operations can run a hall: large enterprises exiting owned data centers, software companies whose platform is their product, and AI companies with dense hardware that few shared halls can cool. Hyperscale cloud providers buy wholesale at a scale that has reshaped the market, which is why the vacancy and preleasing figures above read the way they do.

The overlap zone is where advice earns its keep. A company at 400 kilowatts with a three year horizon and no data center staff is usually better served by a large retail cage from a scale provider, with an expansion option written in, than by a wholesale suite it has to operate. The same company at 400 kilowatts with a credible path to two megawatts and an operations team is often better served starting in wholesale, because moving a hall later costs more than renting growth room now. How to buy colocation covers the audit that produces those numbers.

Who sells wholesale colocation, and who sells retail

Most large operators sell both, from different parts of the business, so the question is which part fits you. Digital Realty is the clearest example in our ranking: cabinets, cages, and private suites on the same campuses, with the growth path from one to the next as the product, and its pricing page covers how that quotes. Switch sells scale and density, campuses engineered for the power per rack that AI class hardware demands, and is most competitive when the requirement is large. Iron Mountain Data Centers sells across the range with a compliance posture that regulated and federal buyers value.

The retail leaders look different. Equinix and CoreSite sell the buildings where carriers, clouds, and exchanges meet, priced per cabinet plus cross connects, and the adjacency is what you pay for; Equinix vs Digital Realty is the cleanest version of the adjacency versus scale decision. Flexential, TierPoint, DataBank, Cologix, and DartPoints sell retail colocation built for the mid market and the regional metros, with cloud, recovery, and managed services bundled into one relationship. Our ranked evaluation of colocation providers states where each one fits, and the colocation hub lists every operator we track.

Mistakes to avoid

Buying wholesale too early. A one megawatt suite with 300 kilowatts of equipment in it pays for 700 kilowatts of empty capacity every month of the term. A ramp schedule softens that; a retail cage with expansion rights avoids it.

Buying retail too late. A requirement that has grown to 800 kilowatts across cages in two buildings is paying retail bundles for operations it already runs itself, with no clean growth path. That is the moment to price a suite.

Mistaking a powered shell for a turnkey hall. The rent looks lower because the cooling, the distribution, and the fit out are yours to build, on your capital and your timeline.

Ignoring the power delivery date. In a market where most new capacity is committed before it opens, the date the operator can energize your capacity matters more than the rate, and it belongs in the contract.

How to choose: five questions

1. Size, today and in three years. Measure the draw at the plug, not the nameplate, and write down the growth you would actually bet on.
2. Operations. Who installs racks, runs the network, and answers at two in the morning? If the answer is nobody, the requirement is retail or managed, whatever its size.
3. Term appetite. Whether the business can sign for five years or longer, because a wholesale lease needs that, and in a rising market wants it.
4. Adjacency. Whether the equipment must sit where carriers, clouds, or counterparties meet, which points to a retail interconnection building regardless of size.
5. Market and power. Which metros have capacity that can be energized on your timeline, since the right model in a market with no capacity is no model at all.

A Technology Advisor from our team prices your written requirement across the whole market at once, in both models where both apply, and pulls competing quotes, free. You keep the decision and sign directly with the provider you choose.