The digital economy is accelerating, and data centre providers are under mounting pressure to scale and advance their infrastructure to accommodate AI workloads, cloud computing, and data-intensive applications. Traditional data centre construction is slow, costly, and vulnerable to outside disruptions. To solve this, providers are turning to modular infrastructure – prefabricated components that can be reconfigured without major construction. These pre-engineered units are becoming a popular solution to meet AI workload demands and high-performance computing (HPC).

Market momentum is strong: InsightAce Analytic notes that as of 2024, the North American modular data centre market size was valued at $4.4 billion USD. Colocation providers are playing a key role in this growth by using modular approaches to deliver AI and HPC-ready environments faster with less disruption.

Modular vs. Traditional Colocation Design 

To understand why modular data centre and colocation approaches are gaining traction, it is helpful to compare them to traditional design. Traditional colocation facilities design relies on fixed infrastructure, with upgrades requiring costly retrofits or long construction projects. Modular infrastructure, by contrast, introduces pre-engineered units that can be deployed on-demand. This allows colocation providers to scale capacity for tenants in weeks or months, rather than years, while avoiding disruptions to existing customers. For tenants running AI clusters or GPU-intensive HPC workloads, this difference is critical – power and cooling can be added quickly without redesigning the entire facility. It also changes the economics – instead of large upfront capital investments, organizations can grow in phases with scalable colocation environments that expand as AI and HPC workloads increase.

Fully Modular Builds

One approach is the fully modular data centre build, where entire facilities are constructed from prefabricated units. Once completed, prebuilt modules are shipped to the desired location and assembled on-site. Since modules are built in a controlled factory environment, organizations benefit from consistent quality standards and avoid common construction risks such as weather-related delays—ensuring faster deployment and greater reliability. This “plug-and-play” model contrasts with traditional construction, which requires years of planning, permitting, and building before the facility becomes operational. While less common in colocation, these same principles can be applied to accelerate deployments for tenants who need rapid scale. 

Modular Components 

In most colocation scenarios, modularity is applied at the component level rather than through fully modular builds. Modular infrastructure is built from pre-constructed units that house the essential systems of a facility, such as power, IT hardware, and cooling.  

These prefabricated modules can be integrated as flexible building blocks for AI-ready colocation environments, allowing providers to expand capacity without disrupting existing tenants. 

Modular components can be rapidly deployed and integrated, significantly reducing the time needed to bring AI and HPC workloads online. This is especially valuable for addressing the need to scale quickly in response to growing computational demands. 

Additionally, modular infrastructure allows for precise scaling of power, cooling, and compute resources, enabling tailored environments for high-density AI/HPC clusters without overprovisioning or disrupting existing operations.

Power Pods and Skid Systems

Prefabricated power pods and power skids provide scalable power distribution. These modular systems arrive pre-tested and fully integrated, reducing installation time and minimizing on-site testing. Flex estimates this approach can cut cabling and testing time up to 70 per cent. These systems often combine switchgear and UPS systems, giving tenants faster access to the high-density power required for AI and HPC workloads. 

Modular Server Racks and Cable Trays

Modular racks enable infrastructure adaptability, because instead of rewiring upon expansion, the modules are already designed for deployment from the start. These modular racks allow incremental expansion or downsizing, supporting cost efficiency while adapting to changing tenant needs. These racks also allow for better equipment airflow since their configurations can optimize cable management, a critical factor when supporting GPU-heavy workloads. 

Cooling Modules

Cooling is imperative when supporting AI and HPC. Modular cooling units provide targeted thermal management for dense workloads, while flex power skids incorporate energy management systems that track power conditions across sites in real-time to optimize energy efficiency. By effectively monitoring and cooling servers, over time, these modules contribute to reduced system strain and a reduction in operational expenses. For AI and HPC clusters, modular cooling ensures that dense GPU environments remain stable and high performing.

Why Modular is Transforming Colocation

With these advantages in mind, it becomes clear why modular infrastructure is gaining momentum in colocation environments. When you sign a lease with a data centre operator or colocation facility, you’re able to leverage their existing infrastructure to power your operations. Modular design principles allow facilities to plan and scale customers without affecting existing operations. It allows colocation facilities to accommodate customers who need different power densities and timelines with greater flexibility.  

Additionally, modular infrastructure helps align supply with demand, avoiding overbuilding based on projections. For example, if an organization suddenly needs to scale up to support a new AI cluster, modular solutions enable that growth without redesigning an entire facility. This agility is especially valuable for AI and HPC projects, where workloads can spike unpredictably and require immediate access to high-density infrastructure.

Implications for AI and HPC Deployments

The clearest value of modular infrastructure emerges when considering advanced workloads like AI and HPC. Modular infrastructure solutions are transforming the way high-performance computing and AI clusters are deployed by emphasizing benefits like speed, scalability, flexibility, and cost-efficiency. Some customers are looking for a “microenvironment”: a tailored, pre-configured setup that aligns with their specific needs, whether for HPC, GPU-powered AI workloads, or specialized hosting. Modular infrastructure makes it possible to deploy these environments quickly and reliably, without the delays and complexities of traditional infrastructure builds. Pre-assembled modules accelerate timelines compared to traditional data centre construction, ensuring organizations can keep pace with demand. Modules can also be relocated or repurposed for temporary projects or seasonal peaks, providing additional flexibility.

Balancing Modular and Traditional Approaches 

The question for many organizations is whether modular infrastructure should replace traditional approaches or compliment them. Modular infrastructure in colocation environments is particularly effective for organizations that need rapid, scalable deployments—especially for AI and HPC workloads.  

Modular and traditional infrastructure are not mutually exclusive; in practice, they complement one another—offering a hybrid approach that combines the speed and flexibility of modular deployments with the reliability and long-term stability of traditional colocation. This synergy enables organizations to optimize performance, scale efficiently, and adapt to evolving requirements without compromising operational continuity or infrastructure integrity.   

As a colocation facility provider, Telehouse Canada offers a cost-effective alternative to building and maintaining proprietary data centres, eliminating the logistical complexities of managing infrastructure and operations. 

Our facilities give businesses direct access to key North American markets through scalable colocation options—including cabinets, cages, and private suites—backed by high-speed, low-latency connectivity engineered for reliability, redundancy, and seamless scalability. 

For organizations with specialized requirements, Telehouse Canada supports tailored deployments that balance flexibility with the stability of our robust colocation infrastructure.  

Conclusion 

As demand for AI and HPC accelerates and require high power densities per rack, advanced cooling options and reliable, low-latency network connectivity, organizations need flexible, future-ready infrastructure strategies, regardless of the model. At Telehouse Canada, our colocation environments are designed to support rapid deployment and scalability, enabling customers to meet evolving AI and HPC workload demands efficiently.  

Connect with Telehouse Canada to learn how colocation can support your AI and HPC strategy with speed, reliability, and scalability.