Co-location has never scaled down to 1U very well, because of the overheads - you can't just let trust 40+ customers to slide their 1U server into the same rack without security concerns and/or losing lots of space, and having extra work with power distribution and networking that the customers themselves are responsible for with a full rack.
Just access arrangement for 40x more customers adds up in admin overheads, and colocation isn't really a tech play as much as it's a real-estate play similar to parking where the goal is minimum effort rent-extraction with as little staff as possible...