Secondary Market: Toronto

Colocation Insights

• Market demand for wholesale colocation produced 81 MW of pre-leasing in 2022.
• Toronto is seeing transaction sizes increase across the board, but larger transactions have not resulted in per kW pricing compression in 2022.
• Transactions under 500 kW are seeing limited supply for space required in under six months.

Market Trends

• Developers are looking to secure land sites over 20 acres. Transactions for greenfield development are limited due to low land and ready power supply.
• Wholesale colocation lease transactions are now typically 4 MWs or greater.
• Power availability on the Ontario grid will change after 2026, as there are capacity constraints forecasted for heavily in-demand renewable power.

Notable Activity

• Microsoft, Meta, IBM Cloud and Google expanded in the Toronto market in 2022.
• CBRE’s Capital Markets team saw five new data center listings, with over $1.8 billion in transaction volume forecasted in 2023.
• Microsoft is planning to begin construction on its 2021 sites acquisitions, with speculation of up to 240 MW of greenfield development.
• Microsoft entered into a 10-year agreement to buy Ontario Power Generation’s energy credits from all its hydroelectric dams and nuclear reactors.

Figure 1: Market Development Information

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 2: Market Inventory and Vacancy

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.

Figure 3: Market Fuel Mix

Source: Toronto Hydro.

Figure 4: Average Asking Rates

Source: CBRE Research, CBRE Data Center Solutions, H2 2022.