North West vs London Colocation: How UK Businesses Can Cut Data Centre Costs

The Cost Case for Looking Beyond London

For years, London has been the default choice for businesses seeking colocation UK services, driven by its dense carrier ecosystem, proximity to financial hubs, and sheer concentration of data centre facilities. But that dominance comes at a price, and for many organisations, that price is becoming harder to justify. IT managers and infrastructure decision-makers are increasingly asking whether the premium for a London postcode is genuinely delivering value, or simply draining budget that could be better spent elsewhere.

The North West of England, anchored by Manchester and its surrounding towns, has quietly built one of the most competitive data centre markets outside the capital. With lower power costs, cheaper real estate, and improving connectivity, the region is now a serious alternative for businesses reviewing their colocation strategy. Understanding the specific differences between the two markets is essential for any organisation looking to optimise its infrastructure spend.

Power and Real Estate: Where the Numbers Diverge

Power is one of the largest operational costs in any colocation environment, and this is where the North West begins to build a compelling case. Average power costs in London data centres can run significantly higher than those in the North West, partly due to grid demand pressures and the cost of maintaining ageing urban infrastructure. Some industry estimates suggest businesses can achieve power cost savings of 15 to 25 percent by moving workloads from London to regional facilities.

Real estate costs feed directly into the rack rates and floor space pricing that colocation providers pass on to customers. Central London land values are among the highest in Europe, and data centre facilities operating in or near the M25 corridor reflect that reality in their pricing structures. In contrast, North West operators benefit from substantially lower land acquisition and construction costs, and those savings are increasingly passed on to customers through more competitive colocation packages.

Connectivity: Closing the Gap

One of the most common objections to regional colocation has historically been connectivity, and specifically the concern that moving away from London means sacrificing access to carrier diversity and low-latency links. That concern is now largely outdated. Manchester in particular sits at the heart of a growing fibre network, with multiple carriers, internet exchanges, and dark fibre routes providing genuine redundancy and competitive bandwidth pricing.

The city is home to Manchester Internet Exchange (MaNAP), one of the UK's established regional internet exchanges, and is served by all major UK carriers. For businesses whose end users or cloud on-ramps are distributed across the UK rather than concentrated in the south-east, a North West colocation facility can actually deliver better average latency to a broader user base. The growth of hyperscaler edge deployments and multi-region cloud architectures has further reduced the dependency on a single London presence.

Latency Considerations for Specific Use Cases

It is important to be honest about where London colocation retains a genuine advantage. Financial services firms running algorithmic trading platforms or requiring sub-millisecond connectivity to the London Stock Exchange will still find it difficult to replicate that performance from a North West facility. Similarly, businesses with dense interconnection requirements to specific London-based partners or exchanges may find the proximity argument outweighs the cost savings.

However, for the vast majority of enterprise workloads, including backup and disaster recovery, SaaS hosting, managed services, and hybrid cloud environments, the latency difference between a Manchester facility and a Docklands facility is operationally negligible. UK data centres in the North West are increasingly capable of meeting the performance requirements of modern enterprise IT without the London price tag.

Sustainability and Future-Proofing

Sustainability is now a board-level concern for many organisations evaluating data centres in the UK, and the North West offers some advantages here too. Several facilities in the region are investing heavily in renewable energy procurement and energy-efficient cooling technologies, in some cases achieving PUE ratings well below the UK average of around 1.5. Lower land costs also make it easier for North West operators to build newer, purpose-built facilities designed from the ground up with efficiency in mind.

London faces genuine constraints in expanding its data centre footprint sustainably. Planning restrictions, power grid capacity limitations, and community opposition to new developments have all slowed growth in the capital. The North West, by contrast, offers more room to develop modern, scalable data centre facilities that can grow alongside customer demand.

Key Questions to Ask Before Deciding

Before committing to a colocation location, infrastructure decision-makers should work through the following:

• What are the latency requirements of your specific workloads and end users?
• How important is direct interconnection to London-based exchanges or cloud on-ramps?
• What are your sustainability and carbon reporting obligations?
• How much of your total colocation cost is driven by power versus connectivity versus floor space?
• Does your disaster recovery strategy require geographic separation from an existing London presence?

Making the Right Call for Your Business

The decision between North West and London colocation is not one-size-fits-all, but the financial case for considering regional options has never been stronger. For many organisations, a hybrid approach combining a lean London presence for latency-sensitive workloads with a larger North West deployment for the bulk of their infrastructure offers the best of both markets. The growth and maturity of colocation UK providers outside London means that cost savings no longer require compromising on quality, resilience, or connectivity. For IT managers and procurement teams, the North West deserves a serious place in any data centre location review in 2024 and beyond.