I Squared Capital has acquired a portfolio of 10 data centers from Cogent Communications, the publicly traded fiber and connectivity provider, in a transaction that positions the infrastructure-focused investment firm to launch a new US-based operator targeting retail colocation and edge deployments. Financial terms were not disclosed. The centers span secondary and tertiary markets where Cogent has operated carrier-neutral facilities alongside its core fiber business.

The acquisition captures roughly 400,000 square feet of gross building area across locations including Phoenix, Miami, and several mid-Atlantic cities. Cogent originally entered the data center business through its 2017 acquisition of TierPoint's colocation assets, but the fiber provider has since prioritized capital allocation toward network expansion over facility development. I Squared is acquiring fully operational sites with existing customer contracts, the majority locked into multi-year commitments averaging three to five years in duration. Power capacity across the portfolio totals approximately 60 megawatts, with most facilities operating at 60 to 75 percent utilization.

The move reflects two overlapping market tensions. Hyperscale operators have absorbed the majority of available wholesale capacity in primary markets, driving land and power costs in Northern Virginia and Silicon Valley to levels that challenge mid-market economics. At the same time, enterprise customers requiring sub-10-kilowatt deployments face limited options as larger operators consolidate around hyperscale contracts. I Squared is betting that a purpose-built retail platform can capture margin in this gap, particularly as latency-sensitive workloads tied to generative AI inference require distributed edge capacity. The firm manages over $40 billion in infrastructure assets globally, with prior data center exposure through its 2021 investment in AirTrunk and stakes in Latin American fiber networks.

Cogent's exit follows a pattern visible across other telecom-adjacent infrastructure plays. The company's data center segment generated roughly $120 million in annual revenue as of its most recent disclosures, representing less than 10 percent of total sales. Management has signaled a preference for asset-light models that monetize fiber routes without the capital intensity of real estate ownership. The sale allows Cogent to redeploy proceeds toward dark fiber builds and peering network expansion, where return profiles better align with its connectivity-first strategy. I Squared, by contrast, brings patient capital and operational expertise through its Digital Infrastructure vertical, which has deployed over $8 billion since inception.

Allocators should monitor whether I Squared pursues bolt-on acquisitions to scale the platform beyond this initial footprint. The firm has indicated plans to invest an additional $500 million to $700 million over the next 18 to 24 months, targeting secondary-market colocation assets and edge infrastructure tied to telecommunications towers. Named leadership for the new operating entity has not been announced, though industry observers expect I Squared to recruit from the senior ranks of QTS, CyrusOne, or DataBank. Power procurement will be the binding constraint; several of the acquired facilities sit in regions where utility interconnection timelines now exceed 24 months for new capacity requests.

The transaction closes as US data center absorption reached 1.2 gigawatts in the fourth quarter of 2024, the highest quarterly total on record. I Squared is acquiring into a market where secondary-city land parcels with firm power allocations trade at premiums that would have been unthinkable 36 months ago.