This week, private co-location and cloud services provider 365 Data Centers announced 2014 milestones that included double-digit and record quarterly sales growth, reflecting the strong demand in the Tier-2 data-center market.

365 Data Centers reported 275 total customers and said it added 33 new customers, three of which they refer to as “the largest social media and video distributors.” The company is focusing on co-location and data-center services in mid-tier cities. Such cities are experiencing the largest traffic growth, and 365 has some hot markets including San Jose, Calif., St. Louis, Mo., and Nashville, Tenn., in its roster of 17 locations. It also covers major areas such as New York and Los angeles.

One thing that's happening is that mid-tier cities are getting built to put people closer to data and applications. Proximity is important when new technologies at the network’s edge deliver higher bandwidth content to customers. Whether it’s high-speed cable, fiber, or 4G LTE, network throughput at the edge is expected to increase by a multiple of 10 within the next decade. These trends point to the necessity for a more distributed architecture.

With 16 HIPAA- and SSAE-compliant data centers in 16 US states, 365 Data Centers looks to capitalize on this need. The company has rolled out its 365 Quick Start scheme, which makes data centers more accessible to customers.

Last year saw 365 Data Centers add $71 million in debt and equity funding, enabling the present expansion. This amount combines $16 million in Series B funding from existing investors Crosslink Capital and Housatonic Partners with a secured $55 million credit facility from Fortress Credit. Crosslink Capital believes 365 Data Centers could reach an $8 billion valuation this year.

365 Data Centers combines the reliability of a physical location with the functionality of a public cloud. With Amazon’s high-profile failures, the hybrid model is appealing to companies whose mission-critical functions require both high availability and performance. After launching the first local enterprise cloud storage-as-a-service feature, 365 Date Centers rolled out self-service provisioning, pay-for-use pricing, and enterprise-class security controls. It promises high availability of storage, caching, and content delivery in a manner suited for carriers, content and cloud providers, and businesses.