Why Colocation Economics Are Forcing a Rethink. And Why “Close to London” Is Now Smarter Than “In London”

By Ben Smoker, CEO – Sota

For more than a decade, London has been the gravitational centre of the UK colocation market. Proximity to financial services, dense connectivity ecosystems, and perceived resilience made it the default location for critical infrastructure.

That assumption is now being quietly, but decisively, challenged.

Rising costs, power constraints, sustainability scrutiny, and extended lead times are forcing organisations to reassess not whether they need colocation, but where it truly makes economic and operational sense. What is emerging is not a retreat from colocation, but a recalibration of geography, risk, and value.

The London Cost Equation Is Breaking Down

Central London colocation has become a victim of its own success.

Fully loaded rack costs in major London facilities frequently far exceed £1,000 per rack per month once power, cooling, and connectivity are included. At the same time, power availability in core hubs has tightened sharply, with many providers quoting 24–48 month lead times for new capacity.

These pressures are structural rather than cyclical:

• constrained grid capacity
• limited development opportunities
• rising construction and financing costs
• higher power density driven by modern workloads and AI

For many organisations, particularly outside financial services and hyperscale demand, the economics no longer align with the perceived benefits of a London postcode.

Risk Has Concentrated, Not Reduced

London is often described as the safest place to host critical infrastructure. In reality, extreme concentration introduces its own form of risk.

Highly dense hubs amplify exposure to:

• power disruption
• network congestion
• shared supply-chain dependencies
• correlated outage events

As more critical workloads cluster into fewer locations, the impact of any incident increases. Resilience, increasingly, is not about centralisation, it is about intentional distribution.

Well-connected regional facilities reduce systemic risk while still delivering the performance and accessibility businesses require.

Close Enough Matters More Than Close As Possible

Latency is frequently used to justify London-centric deployments. In practice, many enterprise workloads tolerate, or never notice, the marginal difference between London and nearby regional locations.

Facilities within 30–60 miles of London can deliver:

• comparable latency
• access to major carrier ecosystem
• faster physical access for engineering teams
• lower and more predictable operating costs
• significantly shorter deployment timelines

For most organisations, this “near-London” model delivers the outcomes that matter, without the premium and rigidity attached to being inside the M25.

Power and Sustainability Have Become Board-Level Issues

The colocation conversation has changed. Space is rarely the limiting factor; power and efficiency are.

AI inference, analytics platforms, and private cloud environments are driving sustained, higher power draw per rack. In constrained metro hubs, this has translated into premium pricing, inflexible power models, and reduced transparency.

Regional private data centres often have structural advantages:

• greater available power headroom
• more efficient airflow and cooling design
• improving PUE through higher utilisation
• greater ability to invest in renewable supply and on-site generation

Sustainability is no longer a marketing add-on. 

Customers, investors, and regulators increasingly expect credible evidence of responsible energy use, transparent power governance, and measurable environmental action.

Fair Pricing Is Becoming a Strategic Requirement

As costs rise, businesses are becoming far more discerning about what they are paying for, and why.

There is growing resistance to opaque power charges, unpredictable escalations, and contracts that quietly transfer risk to customers. In parallel, CFOs are scrutinising infrastructure spend with the same discipline applied to cloud consumption.

The most effective colocation strategies now pair:

• transparent, defensible pricing
• predictable power models
• sustainability commitments
• realistic long-term economics

Disruptive pricing, when applied responsibly and time-bound, is not about a race to the bottom. It is about correcting imbalance, improving utilisation, and aligning value on both sides of the relationship.

Fairness is becoming a differentiator.

Colocation as an Anchor, Not an Endpoint

Increasingly, colocation is being used not as a destination, but as an anchor point:

• supporting hybrid cloud architectures
• enabling cloud optimisation and repatriation
• hosting regulated or sovereign workloads
• underpinning connectivity-led ecosystems

This model favours providers who can offer availability, clarity, and accountability, rather than pure scale or marketing reach.

At Sota, operating private data centres outside London but close enough to benefit from its connectivity ecosystem, we see this shift daily. Organisations are not abandoning cloud or central hubs; they are deliberately rebalancing cost, control, sustainability, and risk.

Conclusion: Geography and Fairness Are Strategic Again

Colocation is not becoming less relevant; it is becoming more selective.

As London economics strain under cost, power, and capacity pressure, organisations are recognising that resilience and performance do not require being in the most expensive location. They require proximity, transparency, operational discipline, and fair pricing.

For many businesses, “close enough” is proving not just sufficient, but strategically superior.

We’d Love To Hear From You

If you are reassessing your infrastructure strategy, whether due to rising costs, sustainability commitments, or power constraints, now is the time to challenge long-held assumptions about location and value.

You can learn more about our private UK data centres, sustainability initiatives, and colocation approach at www.sota.co.uk The right decision isn’t about chasing the cheapest rack or the most prestigious postcode, it’s about long-term confidence, fairness, and control.

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