Data Center Colocation Market - By Colocation (Retail, Wholesale), By End-Use (SME, Large Enterprises), By Application (BFSI, Energy, Government & Defense, Healthcare, Manufacturing, IT & Telecom, Retail) & Forecast, 2024 - 2032

Data Center Colocation Market Size

Data Center Colocation Market was valued at USD 76.8 billion in 2023 and is estimated to register a CAGR of over 11.5% between 2024 and 2032. The market is driven by the increasing demand for more reliable & efficient modern technologies such as intelligent power management systems, sophisticated cooling solutions, and optimized data center designs. The increasing inclination of companies to embrace flexible and adaptable IT infrastructure solutions as well as the implementation of green data center efforts enable a wider range of client segments to employ colocation services, in turn, increasing market growth.
 

Data centers for colocation are evolving into more energy-efficient and adaptable spaces that can manage high-density processing loads and quickly shifting business needs. For instance, in May 2023, QTS Realty Trust, a data center solutions provider, announced the grand opening of its newest colocation site in Phoenix, Arizona. The cutting-edge data center is built to meet the region's increasing need for cloud and hybrid IT infrastructure and provides 32 megawatts of crucial capacity.
 

Data center colocation services facilitate reliable and scalable data solutions with strong infrastructure and connection. Colocation companies provide clients with scalable and adaptable solutions for a variety of IT needs by utilizing flexible data center platforms. The market has grown owing to technological advancements such as the use of sophisticated cooling systems, improved security measures, and the integration of remote monitoring and administration technologies.
 

High initial setup costs are required in the data center colocation industry for establishing, outfitting, and maintaining facilities in accordance with industry standards. These expenses include infrastructure, cooling systems, and security measures. Compliance and security are also important in colocation facilities as hosted data is sensitive. Strict laws, such as the GDPR and HIPAA, require providers to follow strict guidelines and implement strong security measures including encryption, access limits, and frequent audits to prevent data breaches and guarantee legal compliance.
 

Data Center Colocation Market Trends

The market for data center colocation is evolving due to the growing need for adaptable and scalable infrastructure solutions brought on by the rapid growth of computing and data needs. The increasing use of big data analytics, cloud computing, and the Internet of Things (IoT) has increased the demand for effective & affordable data processing and storage solutions. Companies are using colocation services to take advantage of shared data center capabilities and cut expenses by not having to construct and maintain their own infrastructure. The data center colocation market is seeing a trend toward scalable and modular designs in response to this increasing demand. Clients are drawn toward colocation facilities that support sustainability with cost-saving infrastructure. For instance, in July 2023, Huawei launched three new sustainable data center solutions at the 2023 Global Green Data Center Summit. Such initiatives lead to the development of more sustainable and eco-friendly data centers, giving rise to new technologies.
 

Data center infrastructure management solutions are moving toward flexible and scalable designs in response to changing business needs. With this approach, colocation providers can configure systems with more flexibility to accommodate varying data center sizes and resource requirements. Infrastructure deployment and scaling become more efficient and economical when components, such as virtualization platforms, monitoring tools, and automation frameworks, are modularized. This allows for flexibility for different client requirements. This progression encourages effectiveness and creativity in the development and application of solutions for managing data center infrastructure in the colocation sector.
 

Data Center Colocation Market Analysis

Based on colocation, the market is divided into retail colocation, and wholesale colocation. The retail colocation segment was valued at over USD 50 billion in 2023. The growing need for dependable and scalable data center solutions from companies of all sizes leads to significant growth in the retail colocation market. Retail colocation enables customers to match their IT infrastructure with their needs by providing them with dedicated space, power, and connectivity within multi-tenant data centers. Retail colocation is becoming increasingly popular in the industry as it offers a flexible and affordable solution to meet the growing demand for data processing and storage capabilities.
 

Based on application, the market is categorized into BFSI, energy, government & defense, healthcare, manufacturing, IT & telecom, retail and others. The BFSI segment is expected to grow at a fastest CAGR of around 13% during the forecast period. The BFSI sector requires safe, scalable, and highly accessible data infrastructure. Strict data security and compliance laws apply to the BFSI sector. Colocation providers meet these needs as they provide data centers with strong security measures and compliance certifications.
 

Financial institutions need scalable IT infrastructure as they expand or add new services. Colocation centers provide the freedom to scale the IT resources up or down as needed. Advanced data processing and analytics are essential to the BFSI sector's ongoing digital transformation, which makes colocation facilities essential for managing data-intensive jobs. Financial institutions may improve operational efficiency, comply with regulations, and maintain their competitiveness in a dynamic market with the help of colocation services.

North America dominated the global data center colocation market with a major share of over 40% in 2023. The region has a highly developed digital infrastructure backed by significant investments from colocation providers and large technological enterprises. Strong & scalable data center solutions are required owing to the increased demand for cloud services, big data analytics, and IoT applications. Furthermore, the regulatory landscape in North America is favorable to data center operations, with straightforward and business-friendly rules. The region's advantageous geographic position, which offers superior connectivity and low-latency access to international markets, increases its appeal for colocation services and bolsters its dominant position in the industry.
 

Digital transformation, rising internet penetration, and the development of cloud services are driving the growth of the Asia Pacific colocation data center market. Significant infrastructure expenditures and pro-tech government policies that encourage data center expansion and innovation in countries, such as China, India, and Singapore, encourage market growth.
 

Strong demand for dependable and secure data storage solutions, as well as strict data protection laws, such as the GDPR, are driving the colocation data center market in Europe. Benefiting from cutting-edge infrastructure, strong connectivity, and an emphasis on sustainability and energy efficiency, the region gains access to important markets such as the UK, Germany, and the Netherlands.
 

Data Center Colocation Market Share

Equinix, Inc., NTT Communications Corporation, and Digital Realty Trust, Inc. held significant market share of over 15% market share in 2023. These major players are leading the data center colocation industry as they offer a colocation space with vast global reach and cutting-edge service portfolios. With its smart data center locations, cutting-edge interconnection services, and solid relationships with leading cloud providers, Equinix specializes in providing dependable and scalable solutions.
 

Additionally, NTT Communications is distinguished by its extensive network of superior data centers, strong connection choices, and dedication to energy conservation. Both businesses prioritize innovation, security, and sustainability in order to meet the various and expanding demands of businesses and cloud service providers across the globe and maintain their leading positions in the market.
 

Data Center Colocation Market Companies

Major players operating in the market are:

• AT&T Inc.
• Cogent Communications
• CoreSite Realty Corporation
• CyrusOne, Inc.
• Cyxtera Technologies, Inc.
• Digital Realty Trust, Inc.
• Equinix, Inc.
• KDDI Corporation
• NTT Communications Corporation
• Rackspace Inc.
• Verizon Communications Inc.
   

Data Center Colocation Industry News

• In May 2024, Google announced to invest USD 2 billion in data centers and cloud services in Malaysia. This is likely to support the country's digital ambitions and Al capabilities to enhance local industry and global competitiveness.
   
• In August 2023, Digital Realty introduced high-density data center colocation services in 28 markets in Asia Pacific, EMEA, and North America, supporting up to 70 kilowatts of workload per rack.
   

The data center colocation market research report includes in-depth coverage of the industry with estimates & forecast in terms of revenue ($Bn) from 2021 to 2032, for the following segments:

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Market, By Colocation

• Retail colocation
• Wholesale colocation

Market, By End Use

• SME
• Large Enterprises  

Market, By Application

• BFSI
• Energy
• Government & Defense
• Healthcare
• Manufacturing
• IT & Telecom
• Retail

The above information is provided for the following regions and countries:

• North America
  • U.S.
  • Canada
  • Mexico
• Europe
  • UK
  • Germany
  • France
  • Spain
  • Italy
  • Poland
  • Benelux
  • Rest of Europe
• Asia Pacific
  • China
  • India
  • Japan
  • South Korea
  • Australia
  • Southeast Asia
  • Rest of Asia Pacific 
• Latin America
  • Brazil
  • Chile
  • Colombia
  • Argentina
  • Rest of Latin America
• MEA
  • Israel
  • Qatar
  • Saudi Arabia
  • UAE
  • South Africa
  • Nigeria
  • Kenya
  • Rest of MEA