From Passive to Active: How Colocation Is Becoming an AI Optimization Engine
Authored by Derek Gillespie, Chief Executive Officer
For years, colocation was defined by what it didn’t do. It didn’t compute, optimize, or touch the workload itself. A customer brought in equipment, the facility provided space, power, and cooling, and the relationship largely ended there. That model is changing quickly, and AI is the reason.
As AI workloads push power and thermal demands beyond what legacy facilities were designed for, colocation providers are being asked to do more than host equipment. They’re being asked to actively shape how that equipment performs. The shift from passive real estate to active infrastructure is one of the more consequential changes happening in digital infrastructure today.
The density problem
A decade ago, a typical enterprise rack drew somewhere in the range of 5 to 10 kW. According to AFCOM’s 2026 State of the Data Center Report, cited by Upsite Technologies, average rack density climbed from 7 kW in 2021 to 16 kW in 2025, then nearly doubled again to 27 kW in 2026, a roughly fourfold increase in just three years. Separately, Uptime Institute’s 2026 Global Data Center Survey found a growing share of operators now reporting peak rack densities of 30 kW or higher to support advanced computing workloads, while AI training clusters built around the latest GPU platforms can require 100 kW per rack or more.
That kind of jump isn’t absorbed by simply adding circuits. It requires rethinking power distribution, cooling, and floor design from the ground up. Air cooling generally tops out around 40 to 50 kW per rack; beyond that, direct-to-chip and liquid cooling becomes necessary rather than optional. It’s a range we see reflected in day-to-day deployments: At 365 Data Centers, cabinet configurations today span roughly 50 to 160 kW, supported by liquid-cooled environments, depending on what a given workload demands.
This is where colocation stops being a neutral container and becomes an active variable in AI performance. A facility that delivers dense, reliable power and modern cooling directly affects how efficiently a customer’s workloads run. One that can’t do so becomes a bottleneck, regardless of how advanced the customer’s hardware is.
From hosting equipment to enabling performance
The practical implications of this shift show up in a few areas.
Power design now has to plan for variability, not just capacity. AI training creates sharp, uneven power draws as GPUs cycle between full utilization and idle states, a different pattern than the steady loads traditional applications produce. Facilities built only for consistent draw can struggle with that fluctuation.
Cooling has become a crucial design decision. Since not every workload needs the same thermal approach, many operators are deploying hybrid environments mixing air-cooled and liquid-cooled solutions within the same facility. That flexibility, more than any single cooling method, is becoming the more durable strategy.
Speed to capacity matters as much as capacity itself. Enterprises evaluating AI infrastructure often work on compressed timelines, and the choice increasingly comes down to retrofitting existing space versus waiting on new construction. Both paths are valid, but they serve different levels of urgency.
What this means for your infrastructure
Not every workload needs the most extreme density available. Inference workloads, which serve real-time AI responses, often run comfortably at 10 to 20 kW per rack, well within reach of many upgraded facilities. Training workloads are a different story, and that distinction matters when evaluating what a project actually requires.
The broader takeaway: Colocation’s role has expanded. It is no longer just a place to put equipment; it is a factor that directly influences whether AI infrastructure performs as intended. At 365 Data Centers, we’ve treated power and cooling upgrades as a design problem specific to each facility, not a one-size-fits-all retrofit.
As AI workloads evolve, the facilities that can adapt power delivery, cooling strategy, and deployment speed will matter most to the enterprises building on them. Contact us today at https://365datacenters.com/contact/ to discuss what our secure, reliable colocation services can do for you.
