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Montréal + Québec City DCI Report 2021: Data Centre Colocation, Hyperscale Cloud & Interconnection

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Montréal + Québec City DCI Report 2021 Update: Data Centre Colocation, Hyperscale Cloud & Interconnection

The Montréal data centre market was starting to transition even before the COVID-19 pandemic hit. Montréal was home to the first wave of hyperscale cloud expansion in Canada — driven by Québec’s attractive underlying economics and proximity
to connectivity and population centres — and the wholesale colocation market was a primary beneficiary. But hyperscale growth in Canada was never going to follow a straight line. It was destined to change direction and decentralize into other markets like Toronto and that is exactly what has happened.

The two primary data centre markets in Canada — Toronto and Montréal — were once defined by the split between wholesale and retail colocation, but that portrayal increasingly fails to capture the overlap between the two markets as cloud infrastructure and accompanying on-ramps proliferate across these two markets. The end result is a tale of two markets that is increasingly intertwined. What happens on one side, invariably has implications for the other.

Another new wrinkle in the Montréal market is the hyperscale self-build. As cloud matures and capacity requirements expand, hyperscale platforms have begun to diversify and hedge their bets. They are using multiple vendors and when it makes sense, they are working directly with real estate developers to self-build. AWS has completed its first self-build in Montréal and Google has acquired land to do the same. The emergence of self-builds will shape the market’s growth trajectory as literally dozens of MWs of capacity do not end up generating leases and revenue for colocation providers. This will force operators to evaluate new models and could even impact the pricing landscape. It is early days and this is a storyline that will continue to evolve.

Not that long ago, Montréal was a quiet market dominated by local operators. Hyperscale changed the game dramatically, and in less than a decade, the market has been consolidated under a short list of US-based providers that are in it to win. This competition continues to play out on the wholesale colocation side, but is also intensifying in retail colocation as those with an interconnection story separate from the pack and position to capture what is expected to be a steady stream of demand. Cloud uptake is growing, but the ability to connect to public cloud infrastructure in lieu of making all-in bets on cloud, is following a similar path.

The Montréal data centre market continues to push forward. In 2021, this market will generate USD $210m in revenue and grow at a five-year CAGR of 13.9%. Our long-term growth projections have come down as the various moving parts — self-builds,
the rise of Montréal and Québec City — create new currents in the market. Overall however, the story in Montréal continues to be about steady
and consistent growth. This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in Montréal or find a service provider.

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