While IT leaders are becoming more comfortable and adept at balancing workloads across on-premises, colocation data centers and the public cloud, there's a key component missing: connectivity, according to the 2025 State of the Data Center Report from CoreSite, an American Tower company.

While most survey respondents consider direct connectivity through a colocation provider a "must have," citing it as the top factor accelerating their digital transformation, only 19% say their colocation provider offers interconnection to a variety of cloud providers.

"To have a truly successful hybrid IT environment, one that creates a secure and low-latency competitive edge, companies need seamless integration and connectivity across applications and services," said Anthony Hatzenbuehler, SVP of Operations at CoreSite. "IT leaders are relying on colocation providers to bridge the interconnection gap by offering direct cloud interconnections to multiple environments across providers."

Additional findings include:

Organizations Embrace "Cloud-Smart"

Organizations are continuing to shift from a "cloud-only" to a "cloud-smart" or hybrid IT architecture, with 98% of respondents implementing or planning a blend of public and private cloud, on-premises and colocation services to run workloads where they perform best.

AI Shapes IT Infrastructure

The No. #1 reason respondents are choosing to host generative AI applications in colocation environments is the providers' cloud interconnection. High-density power and cooling capabilities, cost, compliance and security are additional factors in that decision-making.

Security is Table-Stakes

For the fourth year in a row, respondents noted physical security as the most important attribute when deciding on which colocation provider to work with.

"The report findings show a decisive shift of AI workloads into colocation data centers, which emphasizes that AI is fundamentally reshaping enterprise infrastructure strategies," said John Gallant, Enterprise Consulting Director at CIO. "Modern colocation facilities are rising to the challenge by delivering a mix of high-performance compute environments with specialized AI hardware, predictable cost structures for large-scale deployments, direct cloud interconnects and the flexibility to run workloads wherever they deliver the most value — empowering organizations to innovate at scale while maintaining control and compliance."

Methodology: The report is based on a quantitative survey of 300 CIOs, CTOs and other IT decision-makers representing a variety of industry sectors, plus in-depth interviews with seven senior technology executives from financial services, healthcare, retail and SaaS organizations. Foundry, an IDG, Inc. company, conducted the research.