Data Centers Colocation Market
The market for Data Centers Colocation was estimated at $70.3 billion in 2024; it is anticipated to increase to $164 billion by 2030, with projections indicating growth to around $334 billion by 2035.
Report Summary
Market Data
Methodology
Table of Contents
Global Data Centers Colocation Market Outlook
Revenue, 2024
$70.3B
Forecast, 2034
$289B
CAGR, 2025 - 2034
15.2%
The Data Centers Colocation industry revenue is expected to be around $81.0 billion in 2025 and expected to showcase growth with 15.2% CAGR between 2025 and 2034.
Colocation services in data centers offer areas within expansive facilities that provide security measures as well as power supply and network connectivity options. This infrastructure has become crucial for companies of all sizes significance, for small and medium sized enterprises that do not have the means to establish their own data centers.
Market Key Insights
- The Data Centers Colocation market is projected to grow from $70.3 billion in 2024 to $290 billion in 2034. This represents a CAGR of 15.2%, reflecting rising demand across Scalability and Flexibility, Reduced IT Infrastructure and Management Costs and Business Continuity and Disaster Recovery.
- Equinix Inc, Digital Realty Trust Inc, CYRUSONE Inc are among the leading players in this market, shaping its competitive landscape.
- U.S. and China are the top markets within the Data Centers Colocation market and are expected to observe the growth CAGR of 13.7% to 18.2% between 2024 and 2030.
- Emerging markets including Indonesia, Brazil and South Africa are expected to observe highest growth with CAGR ranging between 10.6% to 16.0%.
- Transition like Shift towards Green Data Centers is expected to add $10 billion to the Data Centers Colocation market growth by 2030.
- The Data Centers Colocation market is set to add $219 billion between 2024 and 2034, with manufacturer targeting IT & Telecom & Government & Defense Industry Vertical projected to gain a larger market share.
- With Rising demand for reduction of operational costs, and Growth of big data and cloud technology, Data Centers Colocation market to expand 312% between 2024 and 2034.
Opportunities in the Data Centers Colocation
The increased use of technologies like intelligence and ML has led to a demand for advanced data systems that can efficiently handle large amounts of data, in businesses today. A growing trend that is also driving the expansion of the Data Centers Colocation market significantly.
Growth Opportunities in North America and Europe
In North America's data center colocation sector is well established and thriving due to the growing use of cloud services and the demand for dependable and expandable data infrastructure management solutions competition among players like Equinix and Digital Realty is fierce as they strive for market leadership in cutting edge technology cybersecurity and efficient power consumption digital innovations present promising prospects, in this region
In Europe's market scenario flourishes with stringent data protection laws that promote storing data and fuel the need for colocation services like Interexion and Global Switch as major players in this field within the regions competitive landscape Despite its maturity status opportunities continue to grow with the rise of digitalization and infrastructure enhancements, in Eastern Europe.
Market Dynamics and Supply Chain
01
Driver: Rising Demand for Reduction of Operational Costs, and Increased Adoption of Advanced Technologies Across Different Sectors
Many businesses are also turning to colocation as a cost solution, amidst rising capital expenditure and operational costs instead of building their own data centers because it helps cut down on power usage and maintenance expenses significantly. The utilization of colocation services by the IT and telecom sector along with banking and insurance firms and governmental agencies and other entities also serves as a driver for market growth. There is also an increase in the use of cutting edge technologies such, as AI and IoT which demand extensive data processing capabilities.
The rapid expansion of datasets and the adoption of cloud technology by global businesses has also led to a demand for effective data storage solutions. Colocation provides the benefit of scalability enabling companies to expand their server capacity as needed. This capability to meet increasing data storage requirements makes colocation a popular option, for enterprises.
02
Restraint: Rising Energy Costs
Data centers that offer colocation services face a hurdle due to the increasing expenses associated with energy consumption they require to operate their servers and infrastructure effectively resulting in significant financial and ethical challenges for businesses, in this industry because of the rising energy costs and environmental impact caused by their high power usage.
03
Opportunity: The Rise of Edge Computing and Green Data Centers
Businesses are relying more on real time data processing these days. Edge computing – where data centers are located closer to users and devices – is playing a crucial role in IT strategies as a result of this shift in technology trends. This shift provides Data Centers Colocation with an opportunity to act as key partners, in setting up and handling edge data centers effectively to enhance latency issues while also improving bandwidth and data security measures.
In the shift towards practices globally companies are exploring energy efficient options. This opens up an opportunity, for the Data Centers Colocation industry. Through the development of eco data centers businesses can achieve their sustainability targets while also cutting down operational expenses providing a dual benefit to their customers.
04
Challenge: Regulatory Compliance Challenges
Meeting the data regulations set by countries worldwide can be quite challenging for organizations with operations across the globe. Dealing with standards such as GDPR in Europe and CCPA in California as well as changing regulations, in other regions can complicate the setup and maintenance of these systems significantly.
Supply Chain Landscape
1
Hardware Supply Stage
DellIBMCisco Systems
2
Datacenter Development Stage
EquinixDigital Realty
3
Power & Cooling Systems Stage
Schneider ElectricAPC
4
Data Center Operations Stage
CenturyLinkRackspace
1
Hardware Supply Stage
DellIBMCisco Systems
2
Datacenter Development Stage
EquinixDigital Realty
3
Power & Cooling Systems Stage
Schneider ElectricAPC
4
Data Center Operations Stage
CenturyLinkRackspace
Use Cases of Data Centers Colocation in Scalability & Flexibility
Scalability and Flexibility : Colocation services provide a setting where businesses can adjust their physical infrastructure with ease as required without facing high costs. They can. Decrease servers and other hardware without major expenses involved. This adaptability is particularly advantageous for startups expecting expansion or companies dealing with seasonal variations. The key industry leaders, in this sector include Equinix Inc. and Digital Realty.
Business Continuity and Disaster Recovery : Data center colocation facilities are created to withstand environmental catastrophes and maintain uninterrupted functionality, with duplicate power sources effective cooling systems and strong security measures to offer a secure and regulated setting for their customers servers and machinery. This allows businesses to efficiently reduce risks related to power failures, data breaches and unpredictable events. Prominent industry frontrunners include Global Switch and Cyxtera Technologies.
Reduced IT Infrastructure and Management Costs : Businesses can save a lot of money by using colocation services of managing their own server rooms since they dont have to worry about building and maintaining the infrastructure themselves or ensuring its security all the time. Shared costs for usage cooling systems, power consumption and security measures, among multiple users make colocation a cost effective option. These financial benefits allow businesses to allocate their resources efficiently towards their primary activities.
Recent Developments
The colocation market for data centers has experienced growth in the past few years due to the growing demand for secure and dependable data storage options as well as the uptick, in cloud based services usage and data traffic volume increase. Businesses are frequently opting to outsource their data center setups to lower operational expenses and enhance business continuity while concentrating more effectively on their main business functions.
December 2024 : Digital Realty revealed plans to enhance their colocation services with the construction of four additional data centers, in Europe and Asia.
October 2024 : Equinix purchased two data center facilities in Canada as part of its efforts to strengthen its presence, in North America.
July 2024 : CyrusOne introduced a colocation servicethat'scarbon neutral to establish a new benchmark in environmental sustainability, within the industry.
Impact of Industry Transitions on the Data Centers Colocation Market
As a core segment of the IT Services & Managed Solutions industry,
the Data Centers Colocation market develops in line with broader industry shifts.
Over recent years, transitions such as Shift towards Green Data Centers and Emergence of Edge Computing have redefined priorities
across the IT Services & Managed Solutions sector,
influencing how the Data Centers Colocation market evolves in terms of demand, applications and competitive dynamics.
These transitions highlight the structural changes shaping long-term growth opportunities.
01
Shift towards Green Data Centers
Many companies are shifting to eco data centers to lessen their environmental footprint and adopt sustainable practices while also saving money through energy efficient technologies and reduced electronic waste management efforts. The move towards data centers is not only a reflection of their commitment, to social responsibility but is also influencing the Data Centers Colocation market dynamics as operators reconsider their strategies for a more sustainable future.
02
Emergence of Edge Computing
The growing volume of data produced each day requires processing and reduced delay times. This necessity is leading to a transition from centralized data centers to edge computing. In edge computing data is handled closer, to its origin resulting in decreased latency and enhanced service speed.