Montréal + Québec City DCI Report 2023 Update: Data Centre Colocation, Hyperscale Cloud & Interconnection
The story of the Montréal data centre market continues to be written by the direction of hyperscale cloud. Hyperscale found its first Canadian home in La Belle Province and the initial phase of builds in Montréal propelled the market to prominence. But the long-term fate of the market was always going to be intertwined with Toronto, and at some point, the Western Canadian provinces of Alberta and British Columbia. That time has arrived and the cloud market in Canada has started to decentralize. In the last few years, the public clouds have descended on Toronto in a bigger way and now have started to make their way out west, with AWS building a second cloud infrastructure region in the Calgary, Alberta area. The presence of cloud in those markets will inevitably have an impact on the Montréal market’s trajectory as end users look to get closer to their infrastructure and build geographic diversity into their footprints. The fact is that Montréal will no longer be the only place serving hyperscale cloud in Canada.
Another challenge facing the market is the emergence of the self-build. Land and power is accessible to hyperscalers directly and there is now enough scale in the market to justify self-perform scenarios. AWS has built an AZ on its own, while Google Cloud and OVHcloud are doing the same, and others are reported to be considering similar strategies. Self-builds are taking a bite out of the TAM and shifting the demand profile, but there is still plenty of demand for colocation. Time-to-market, geographic diversity, and build and construction efficiency remain important factors and still puts colocation providers in a favourable position.
There are other currents in the market to consider. Power availability and transmission on the Island of Montréal has become more difficult and will push builds further out, and the regulatory environment is becoming a bit more cautious about data centre development as other industries rise and move up the priority list. But Montréal remains an up-and-coming hotbed for emerging technology-related industries such as gaming, artificial intelligence, new media and HPC. The emergence of HPC, in particular, has a chance to create a new wave of demand as the underlying fundamentals here that were so attractive to hyperscale (and for a brief period, cryptocurrency) also fit the requirements of HPC. Meanwhile, there is growing competition and potentially further decentralization in the interconnection market. Critical mass has been achieved, but there will be a need to reach another level sooner than later.
The Montréal data centre market continues to develop and mature. In 2023, this market will generate USD$333.5m in revenue and grow at a five-year CAGR of 19.3%. This projection is up significantly from previous years and could still come down a bit based on decisions yet to be made by some hyperscalers around using colocation or self-building. Overall however, the Montréal market is on solid footing and is showing 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.