Hosting Servers at a Separate Location

We have a new IT director who is recommending we move most of our servers to a Hosting company.His reasoning for this move is that we are a semi-small company, have no fire-supression system,and only one large Liebert UPS.The hosting company has offered rack space,
redundent UPS and fire suppression.
The other Sys. Admin. and myself dont feel this is a smart choice but we need hard data to prove our point.Has anyone else gone through this??What are the real downsides?
Any help is greatly apreciated!