Start with the question the deal type actually answers
Every data center occupancy decision comes down to one trade: how much infrastructure risk and operational control do you want to own, versus how much do you want a landlord or operator to own on your behalf. Colocation, wholesale, and powered shell sit at three different points on that spectrum — and confusing them during site selection is how tenants end up in a structure that doesn't fit their actual requirement.
The three structures, side by side
| Structure | What you lease | Typical scale | Who operates the M&E plant | Control |
|---|---|---|---|---|
| Colocation | Cabinets, cages, or a partial suite | A few kW up to low hundreds of kW | Operator | Lowest |
| Wholesale | A dedicated data hall | Roughly 1 MW and up | Operator | Moderate |
| Powered shell | The building envelope + contracted utility power | Multi-MW, building-scale | Tenant | Highest |
Colocation: fastest to deploy, least to own
Colocation is the right structure when your load is small relative to a full data hall, your growth is uncertain, or speed to deployment matters more than customization. You're leasing space inside a facility the operator designs, builds, cools, and secures — power, cooling, and physical security are included, and you're typically billed for space plus a metered or tiered power draw.
What you're negotiating: committed power per cabinet or cage, cross-connect and interconnection pricing, SLA remedies for outages, and expansion rights to adjacent capacity as you grow. What you're not negotiating: anything about how the building's mechanical and electrical plant actually works, because you don't operate it.
Wholesale: scale without owning the plant
Wholesale fits users with predictable, larger loads — typically starting around 1 MW — who want a dedicated, lockable data hall with more control over rack layout, equipment selection, and physical access than colocation allows, but without taking on the capital cost and operating responsibility of building and running the mechanical and electrical infrastructure themselves.
The negotiation here gets closer to a traditional net lease: committed power reservation with a clear, priced path to expand it, redundancy tier (N, N+1, or 2N) specified rather than assumed, uptime SLA with meaningful — not symbolic — service credits, and clearly defined responsibilities for maintenance versus operator obligations.
Powered shell: maximum control, maximum responsibility
Powered shell — sometimes paired with a build-to-suit — is where the tenant leases the building envelope and a contracted utility power feed, then designs, builds, and operates everything from the utility service entrance inward: generators, UPS, cooling plant, and the data hall itself. This is the structure for large, sophisticated users — typically hyperscale or large enterprise operators — who need full control over infrastructure design and are equipped to own the operating risk that comes with it.
The site-selection criteria shift accordingly: available land near a substation with confirmed capacity, utility interconnection timeline, and land use entitlements become the binding constraints — often ahead of the building itself, which in a powered-shell deal you may be constructing to your own specification.
Matching structure to requirement
- Uncertain or modest load, need speed — colocation. Lowest commitment, fastest deployment, easiest to right-size as you learn your actual usage pattern.
- Predictable load at scale, want more control without owning the plant — wholesale. The middle ground most enterprise and mid-market hyperscale users land on.
- Very large, specialized, or long-horizon requirement — powered shell or build-to-suit. Highest control, highest capital commitment, longest lead time.
Whichever structure fits, the negotiation principle doesn't change: power reservation, redundancy, interconnection rights, and exit obligations need to be specified in the contract, not assumed from a sales conversation. See our data center tenant representation page for how we run that negotiation.