Why Businesses Are Choosing Montreal for Colocation
5 min read
Montreal has become a preferred destination for colocation over the past few years. Its favorable government policies, cool climate, and relatively low energy costs all help to create an appealing environment for a number of companies seeking to meet their data center needs. The city is now considered one of the most tech friendly locations in North America and is poised to compete with some of the largest data center markets on the east coast.
History of the Montral market
Canada’s data center industry was relatively small compared to other North American markets until just a few years ago. According to AJ Byers, CEO at ROOT Data Center, a 5 MW data center was considered massive in Canada until 2012. As time progressed, major cloud companies and hyperscale enterprises recognized the potential of the region and began to implement their IT infrastructure there. With these developments, they provided large scale, in-country options for local businesses and government agencies and triggered unprecedented growth in the market.
Cologix was the first major colocation provider in Montreal, setting up base in 2013. They were soon followed by other industry giants such as Ericsson, Intronis and SoftLayer. When major cloud providers like Amazon Web Services and Google Cloud entered the market, they helped to catalyze migration to the cloud for several Canadian organizations. This served as a major push forward for their data center industry. As of early 2019, there are more than 450 MW of capacity deployed in Canada, with Montreal leading the way. Currently, ROOT operates Montreal’s largest data center, which is capable of scaling to 65 megawatts.
Colocation in Montreal today
One of the major factors that sets Montreal apart from nearby North American colocation markets is lower energy costs. Most of its power is derived from hydroelectric sources, which provides a cleaner, cheaper, and renewable form of energy. In fact, the region currently has the lowest electricity rates in North America. The city is also considered an excellent option for colocation because of its climate. With an annual temperature of 42.8 Fahrenheit, it’s perfect for data center cooling. Therefore, the need for extensive cooling systems is significantly minimized and this in turn helps to reduce operational costs.
Major telecom providers such as Tata, Cogent and Orange all have a presence in Montreal for its strategic location and direct access to the subsea Atlantic fiber networks, which serve as a gateway to Europe. As a result, the area benefits from exceptional connectivity and is even home to QIX, also known as the Montreal Internet Exchange. Microsoft, Google and Akamai all peer at this exchange in order to improve the traffic flow and reduce costs. With such reliable interconnectivity and a solid infrastructure, Montreal can be considered a reasonably priced alternative to other Northeast markets like New York City.
Apart from its strategic geographic location, new data centers can also benefit from the incentives provided by the government of Quebec. Eligible tech-based businesses are able to receive up to $25,000 tax credit per new IT employee, 30% tax credit on R&D expenditure, and accelerated capital depreciation rates when purchasing clean energy equipment. The government also launched a major investment initiative to help stimulate the economy of Quebec. Under this program, projects of $100 million or more can qualify for a 15-year tax exemption on corporate income and employer health tax as long as they meet certain criteria. This helps to make the region increasingly attractive for major players and will bolster development for years to come.
Montreal’s healthy economy is brimming with economic opportunities – the government is boasting of record employment and $24 billion in construction projects currently underway. They have prioritized the development of their technology sector and currently the city accounts for around 72 percent of all information and communications technology jobs in the province. Although still relatively young, their colocation market has already managed to attract significant, high profile investments and shows no signs of slowing down. In January 2019, Vantage Data Centers acquired 4 Degrees Colocation for approximately $200 million, adding campuses in Montreal and Quebec to their other facilities across North America. They expressed intentions to begin expansion on these newly acquired properties immediately and increase total capacity to 31MW.
Over the next few years we can expect to see Montreal emerge as one of the data center market leaders and become a true digital epicenter and tech hub within the North American region. With a strategic geographical location, solid interconnectivity, low energy costs and massive potential for expansion, it is certainly a market worth considering, especially for businesses that are interested in data services located in the Northeast region.
Find the right colocation facility in the Montreal market to meet your needs using our data center sourcing and pricing tool or contact an advisor to develop a hybrid solution that includes Montreal colocation.