Customers requiring 300 to 500 kilowatts of critical power have more options than ever when it comes to colocation facilities particularly as the convergence of wholesale and retail colocation ensues.

A recent Data Center Knowledge article explored colocation pricing trends and highlighted a new trend in which sellers in the wholesale data center space target smaller deals that traditionally have been prime candidates for “retail” colocation.

“Average prices are starting to fall, simply because the deals are much more competitive,” said Dan Golding, managing director at DH Capital, an investment banking firm that tracks the data center sector, in the article. “Wholesale is really going mainstream. The appetite for wholesale space is huge. That’s certainly causing (colocation) pricing to fall a little bit.”

Everett Thompson, president of Wired Real Estate Group, added that the market is more competitive than ever as wholesale companies begin looking at smaller deals while the colocation players are competing for large deals.

In the wholesale data center model, tenants lease dedicated, fully-built data center spaces. Conversely, in colocation, a customer rents out a smaller area within a data center, typically placed in a caged-off area or within a cabinet or rack.

According to the article, in early 2010, wholesale suppliers began competing for deals of 500 kilowatts and, more recently, some reports indicate that wholesale players are now considering requirements as small as 300 kilowatts. This means that the convergence of wholesale and retail colocation is happening.

For example, a potential 300 kilowatt colocation customer may instead choose to pursue a 500 kilowatt wholesale deal because it’s the same price or cheaper as they were paying with retail and they can enjoy the added bonus of having room for expansion.

This new trend in the retail and wholesale colocation markets is creating pricing issues in some markets, according to some colocation companies cited in the article. With the market becoming oversaturated, competitive pricing becomes even more paramount.