Glossary

Interconnection Density

Also known as: carrier density, network density

The concentration of network carriers, internet exchanges, cloud on-ramps, and cross-connected tenants within a data center or campus, which determines how valuable that facility is as a hub for low-latency data exchange.

Interconnection density is largely self-reinforcing: network carriers and cloud providers want to be present where their customers already are, and enterprise and colocation tenants want to locate where the carriers and clouds they need are already present, which is why a small number of facilities in each metro accumulate outsized interconnection ecosystems that are extremely difficult for a new entrant to replicate regardless of how much capital it spends on the building itself. This dynamic makes interconnection density one of the most durable competitive moats in commercial real estate, comparable to network effects in technology businesses, and it is a primary reason certain "legacy" downtown data center buildings command premium rents and retain tenants despite being technically inferior in power density or efficiency to newer suburban campuses. Interconnection revenue itself — cross-connect fees and internet exchange participation — is high-margin and sticky, and is frequently underwritten as a distinct, more valuable revenue stream than base cabinet or power rent.