In a new series called Data Center Destinations, From the Racks will take a closer look at the geographies that are gaining attention from the data center providers and tech companies that are looking to build new data centers. Our first spotlight is on Toronto Data Centers.
What’s Driving Demand?
Not only is Toronto Canada’s largest city, it is the fourth largest city in North America. Toronto is also home to the seventh largest stock exchange in the world, and features a bustling banking and financial services industry.
The data generated from these banking and financial services companies needs to be managed and stored somewhere. Their customer-facing applications, employee applications and enterprise services also need a home in a data center. But banking and finance are just one part of the picture.
Technology and IT companies are also seeing significant potential in Toronto. In fact, just this past June, Josh Guttman - a partner at SBNY, formerly Softbank Capital – penned an article for TechCrunch about Toronto’s burgeoning IT and tech startup industries.
According to Guttman, “…Toronto is poised to contend as one of the biggest North American hubs for technology startup activity over the next five-10 years.”
Many of these startup companies will look to hyperscale companies – especially cloud and SaaS solutions – to provide the IT infrastructure, development space and enterprise services they need to get off the ground. And that means hyperscale companies see significant potential for growth in the Toronto market, too.
To meet that growth, they’ll need colocation or wholesale data centers in Toronto.
But Why Build Here?
Companies looking for optimal performance in their hyperscale services – including cloud services and Software-as-a-Service (SaaS) solutions – want to be close to the data centers that are housing and delivering these services. This helps to reduce latency and ensures optimal performance of the applications. For IT startups and other technology-reliant companies, high latency could be the difference between services that benefit the business and those that slow it down.
There is also the issue of data sovereignty.
Although Toronto is just over the border from the United States. Companies might not want their data making that trip. There is a new trend around the globe where federal governments are restricting and regulating where data that originates within their borders can travel.
In many cases, these regulations dictate that data that originates within a country – and features personal information about its citizens – is required to stay within that country. This is a challenge to companies that are using data centers just across the border to store or compute data. And it means that Canadian companies may want or need to keep their data in the country so that they avoid data sovereignty issues in the future.
Checking the Boxes…
For a geographic location to be conducive for data center construction, it needs to meet certain requisites and requirements. These include, but are not limited to, the following:
- Available real estate and space, at reasonable prices
- Educated workforces capable of managing and maintaining data center equipment
- Consistent and reliable power
- Available connectivity
The city of Toronto, and its surrounding metro area, meets these requirements.
The area is home to a very educated workforce. According to Josh Guttman, “Most people don’t realize Toronto…produces the most engineering-focused university graduates each year. There are 150,000 full-time students enrolled in universities throughout the Greater Toronto Area, all within 90 minutes of the city center.”
Toronto is also home to a very reliable and consistent power grid. And, being within a geographic area and corridor that also includes cities like Detroit and New York, it is well connected to its surrounding geographies and the outside world.
Finally, Toronto is a connectivity hub.
Toronto is the number one connectivity hub of Canada. The city is home to major telecommunications “hotels,” including 151 Front Street and 905 King Street, where much of the interconnections and network-to-network interconnections (NNIs) take place. The Greater Toronto Area (GTA) offers a multitude of connectivity options including dark fiber, regional/metro fiber, and also long-haul routes.
Today the Toronto area serves as the connectivity gateway for Canada.
These factors, and a significant spike in demand, are setting the stage for data center construction in Toronto in the coming years. If you’d like learn more about why one wholesale data center provider is making a move north of the border, watch the following video: