Description
Toronto continues to be the largest and most dynamic data centre colocation market in Canada and is expected to generate $467m USD in 2024 and grow at a five-year CAGR of 18.3% through 2029. The overall demand profile remains strong, driven by hyperscale demand that is driving up leasing rates to full capacity and higher, when accounting for pre-leasing, while pushing the market’s overall growth rate up from our last update. Currently however, inventory is not keeping up with demand. There has not been a great deal of new inventory under construction and absorption is going to remain over 100% for hyperscale colocation supply. This has also put upward pressure on pricing.
There are a number of dynamics in play that have impacted the landscape. Toronto previously did not see self-builds, but that has changed, with Microsoft acquiring land in the last few years and preparing to build out its own AZs in suburban Toronto. This will undoubtedly impact supply and demand as Microsoft has been the largest consumer of hyperscale colocation capacity in Toronto.
Despite the shift to self-building, there is still plenty of demand in the market. AWS is deploying Local Zones in Toronto and there is a chance this will transform into a full cloud region. Meanwhile, Oracle Cloud is seeing healthy AI demand and taking down larger chunks of capacity, and the webscale tier is seeing movement with OVHcloud setting up new node in the market. AI also looms as a potential growth engine for the market, but it is still relatively early in Canada, and the advantages around energy, renewables and climate that made Montréal the original hyperscale cloud locale in Canada are what could make it the main AI hub in Canada sooner than later.
The changing landscape has pushed the borders of the market and given rise to new clusters. STACK Infrastructure, for example, has built a new facility in Scarborough and the new OVHcloud data centre is in Cambridge. The challenges around finding suitable land for data centres is pushing operators and investors further out of Toronto. But overall, this is still a market with plenty of long-term growth potential. Cloud adoption in Canada is still at an early stage of development and the cost optimization wave that emerged coming out of the global pandemic has subsided and is giving way to early signs of growth acceleration. AI could be the spark that really pushes things to the next level.
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 Toronto or find a service provider. The methodology applied continues to be the most robust in the industry. We track supply on a space and power basis, split all the metrics along retail and hyperscale lines, and aggregate inventory in multiple tiers according to build status, absorption rates and maximum capacity levels. Hyperscale cloud nodes and on-ramps are mapped and a complete directory is provided.
