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Data Centers Colocation Market
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Data Centers Colocation Market

Author: Ranjana Pant - Research Analyst, Report ID - DS1103015, Published - January 2025

Segmented in Type (Retail, Wholesale), Service Model (Dedicated Hosting, Managed Hosting, Cloud Hosting), Organization Size, Industry Vertical and Regions - Global Industry Analysis, Size, Share, Trends, and Forecast 2024 – 2034

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Global Data Centers Colocation Market Outlook

Data center colocation is changing the way businesses handle their data requirements in this era by offering flexible and cost efficient solutions that can meet today's demanding standards effectively and securely. The market, for Data centers colocation was estimated at $70.3 billion in 2024. It is anticipated to increase to $164.4 billion by 2030 with projections indicating a growth to around $333.6 billion by 2035. This expansion represents a compound annual growth rate (CAGR) of 15.2% over the forecast period.


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 Size Forecast & Key Insights

2019
$70.3B2024
2029
$289B2034

Absolute Growth Opportunity = $219B

The Data Centers Colocation market is projected to grow from $70.3 billion in 2024 to $289 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.

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 Market

Colocation for AI and ML Workloads

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 driving the expansion of the Data Centers Colocation market significantly.

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.

Growth Opportunities in North America and Europe

Europe Outlook

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.

North America Outlook

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

North America Outlook

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

Europe Outlook

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.

Growth Opportunities in North America and Europe

Established and Emerging Market's Growth Trend 2025–2034

1

Major Markets : United States, China, Japan, Germany, United Kingdom are expected to grow at 13.7% to 18.2% CAGR

2

Emerging Markets : Indonesia, Brazil, South Africa are expected to grow at 10.6% to 16.0% CAGR

Market Analysis Chart

The Data Centers Colocation market is greatly impacted by factors that influence its current status and future direction. Significant drivers for the Data Centers Colocation market include the increasing demand for dependable data storage and backup solutions. The advanced data security features provided by colocation providers are a draw, for businesses looking to protect their important data.

Recent Developments and Technological Advancement

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.

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.

Impact of Industry Transitions on the Data Centers Colocation Market

As a core segment of the IT 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 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.

1

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.

2

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.

Global Events Shaping Future Growth

The chart below highlights how external events including emerging market developments, regulatory changes, and technological disruptions, have added another layer of complexity to the IT industry. These events have disrupted supply networks, changed consumption behavior, and reshaped growth patterns. Together with structural industry transitions, they demonstrate how changes within the IT industry cascade into the Data Centers Colocation market, setting the stage for its future growth trajectory.

Market Dynamics and Supply Chain

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.

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.

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

Hardware Supply Stage

Dell

IBM

Cisco Systems

Datacenter Development Stage

Equinix

Digital Realty

Power & Cooling Systems Stage
Schneider Electric / APC
Data Center Operations Stage
CenturyLink / Rackspace
Hardware Supply Stage

Dell

IBM

Cisco Systems

Datacenter Development Stage

Equinix

Digital Realty

Power & Cooling Systems Stage

Schneider Electric

APC

Data Center Operations Stage

CenturyLink

Rackspace

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Leading Providers and Their Strategies

Application AreaIndustryLeadingProvidersProviderStrategies
Disaster Recovery and Business Continuity
IT Services and Consulting
Equinix, NTT Communications, Digital Realty
These providers offer industry-leading security and redundancy measures to ensure minimal interruption for hosted businesses in event of a disaster
Data Backup and Archival
Cloud Computing and Hosting Services
Cyxtera Technologies, Global Switch, and Rackspace
They offer high capacity, high-speed networks, and scalable storage environments to cater to bulk data archival effectively
Scalable Infrastructure
Digital Media and Entertainment, E-commerce
CoreSite, Cyxtera Technologies, AWS
These providers emphasize on robust, scalable infrastructure and flexible payment structures for increasing infrastructural needs without large capital expenditure
Content delivery and Layer 4 - 7 services
Telecommunications
Interxion, Telehouse, CenturyLink
These providers have locations worldwide with peering exchanges to facilitate high-speed content delivery and superior IT infrastructure. They use optimal routing, load balancing, and content caching strategies for enhanced Layer 4 - 7 functionality.

Elevate your strategic vision with in-depth analysis of key applications, leading market players, and their strategies. The report analyzes industry leaders' views and statements on the Data Centers Colocation market's present and future growth.

Our research is created following strict editorial standards. See our Editorial Policy

Applications of Data Centers Colocation in Scalability and Flexibility, Business Continuity and Disaster Recovery and Reduced IT Infrastructure and Management Costs

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.

Data Centers Colocation vs. Substitutes:
Performance and Positioning Analysis

Data center colocation presents a cost option for businesses looking for sophisticated infrastructure with security and cooling systems in place—standing out from on site data centers and cloud services by offering scalability at minimal expenses. Its distinct market advantage stems from its ability to meet the increasing demand of medium sized enterprises for budget friendly data storage solutions while paving the way, for significant market expansion.

Data Centers Colocation
  • Public Cloud Services /
  • Private Cloud Services /
  • On Premises Data Centers
    High scalability, cost efficiency
    Limited control, potential for unexpected costs
    Cost-effectiveness, scalability, and flexibility of cloud services
    Potential security risks, lack of control over data management

Data Centers Colocation vs. Substitutes:
Performance and Positioning Analysis

Data Centers Colocation

  • High scalability, cost efficiency
  • Limited control, potential for unexpected costs

Public Cloud Services / Private Cloud Services / On Premises Data Centers

  • Cost-effectiveness, scalability, and flexibility of cloud services
  • Potential security risks, lack of control over data management

Data center colocation presents a cost option for businesses looking for sophisticated infrastructure with security and cooling systems in place—standing out from on site data centers and cloud services by offering scalability at minimal expenses. Its distinct market advantage stems from its ability to meet the increasing demand of medium sized enterprises for budget friendly data storage solutions while paving the way, for significant market expansion.

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Research Methodology

This market research methodology defines the Data Centers Colocation market scope, gathers reliable data, and validates findings using integrated primary and secondary research. Our systematic framework ensures precise market sizing, growth trend analysis, and competitive benchmarking.


Secondary Research Approach


We begin secondary research by defining the targeted market at macro and micro levels. As part of the IT ecosystem, we analyze Data Centers Colocation across Retail and Wholesale Applications. Our team gathers data systematically from country level ministerial sources, industry associations & federations, trade databases, company annual & quarterly reports and other credential sources, enabling us to map global and regional market size, pricing trends, regulatory standards, and technology advancements.



Key Sources Referenced:

• Annual Business Surveys (US, EU, Japan)

• NAICS - Economic Statistics (US, Canada) / IMF DSBB

Annual Reports / Industry Magazines / Country Level

DataString Database

We benchmark competitors such as Equinix Inc, Digital Realty Trust Inc, and CYRUSONE Inc by reviewing company financial statements, and regulatory filings. Our secondary insights identify key market drivers and constraints, forming the analytical foundation for primary research.


Primary Research Methods


We conduct structured interviews and surveys with industry stakeholders, including Hardware Supply Stage, Datacenter Development Stage, and Power & Cooling Systems Stage. Our geographic coverage spans Americas (40%), Europe (30%), Asia-Pacific (25%) and Middle East & Africa (5%). Our online surveys generally achieve a response rate of above 65%, and telephone interviews yield 60%, resulting in above 92% confidence level with a ±7% margin of error.


Through targeted questionnaires and in-depth interviews, we capture purchase intent, adoption barriers, brand perception across Segment Type. We use interview guides to ensure consistency and anonymous survey options to mitigate response bias. These primary insights validate secondary findings and align market sizing with real-world conditions.


Market Engineering & Data Analysis Framework


Our data analysis framework integrates Top-Down, Bottom-Up, and Company Market Share approaches to estimate and project market size with precision.


Top-down & Bottom-Up Process


In Top-down approach, we disaggregate global IT revenues to estimate the Data Centers Colocation segment, using historical growth patterns to set baseline trends. Simultaneously, in Bottom-up approach, we aggregate Country-Level Demand Data to derive regional and global forecasts, which provide granular consumption insights. By reconciling both approaches, we ensure statistical precision and cross-validation accuracy.


We evaluate the supply chain, spanning Hardware Supply Stage (Dell, IBM), Datacenter Development Stage (Equinix, Digital Realty), and Power & Cooling Systems Stage. Our parallel substitute analysis examines Public Cloud Services, Private Cloud Services, and On Premises Data Centers, highlighting diversification opportunities and competitive risks.


Company Market Share & Benchmarking


We benchmark leading companies such as Equinix Inc, Digital Realty Trust Inc, and CYRUSONE Inc, analyzing their capabilities in pricing, product features, technology adoption, and distribution reach. By assessing company-level revenues and product portfolios, we derive market share comparisons, clarifying competitive positioning and growth trajectories across the ecosystem.


Our integration of data triangulation, supply chain evaluation, and company benchmarking, supported by our proprietary Directional Superposition methodology enables us to deliver precise forecasts and actionable strategic insights into the Data Centers Colocation market.


Quality Assurance and Compliance


We cross-reference secondary data with primary inputs and external expert reviews to confirm consistency. Further, we use stratified sampling, anonymous surveys, third-party interviews, and time-based sampling to reduce bias and strengthen our results.


Our methodology is developed in alignment with ISO 20252 standards and ICC/ESOMAR guidelines for research ethics. The study methodology follows globally recognized frameworks such as ISO 20252 and ICC codes of practice.

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Data Centers Colocation Market Data: Size, Segmentation & Growth Forecast

Report AttributeDetails
Market Value in 2025USD 81.0 billion
Revenue Forecast in 2034USD 289 billion
Growth RateCAGR of 15.2% from 2025 to 2034
Base Year for Estimation2024
Industry Revenue 202470.3 billion
Growth OpportunityUSD 219 billion
Historical Data2019 - 2023
Growth Projection / Forecast Period2025 - 2034
Market Size UnitsMarket Revenue in USD billion and Industry Statistics
Market Size 202470.3 billion USD
Market Size 2027107 billion USD
Market Size 2029142 billion USD
Market Size 2030164 billion USD
Market Size 2034289 billion USD
Market Size 2035333 billion USD
Report CoverageMarket revenue for past 5 years and forecast for future 10 years, Competitive Analysis & Company Market Share, Strategic Insights & trends
Segments CoveredType, Service Model, Organization Size, Industry Vertical
Regional scopeNorth America, Europe, Asia Pacific, Latin America and Middle East & Africa
Country scopeU.S., Canada, Mexico, UK, Germany, France, Italy, Spain, China, India, Japan, South Korea, Brazil, Mexico, Argentina, Saudi Arabia, UAE and South Africa
Companies ProfiledEquinix Inc, Digital Realty Trust Inc, CYRUSONE Inc, China Telecom Corporation Limited, Global Switch, China Unicom, NTT Communications Corporation, AT&T Inc, Verizon Communications Inc, Internap Corporation, KDDI Corporation and Telstra Corporation Limited
CustomizationFree customization at segment, region or country scope and direct contact with report analyst team for 10 to 20 working hours for any additional niche requirement which is almost equivalent to 10% of report value

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Table of Contents

Industry Insights Report - Table Of Contents

Chapter 1

Executive Summary

Major Markets & Their Performance - Statistical Snapshots

Chapter 2

Research Methodology

2.1Axioms & Postulates
2.2Market Introduction & Research MethodologyEstimation & Forecast Parameters / Major Databases & Sources
Chapter 3

Market Dynamics

3.1Market OverviewDrivers / Restraints / Opportunities / M4 Factors
3.2Market Trends
3.2.1Introduction & Narratives
3.2.2Market Trends - Impact Analysis(Short, Medium & Long Term Impacts)
3.3Supply Chain Analysis
3.4Porter's Five ForcesSuppliers & Buyers' Bargaining Power, Threat of Substitution & New Market Entrants, Competitive Rivalry
Chapter 4

Data Centers Colocation Market Size, Opportunities & Strategic Insights, by Type

4.1Retail
4.2Wholesale
Chapter 5

Data Centers Colocation Market Size, Opportunities & Strategic Insights, by Service Model

5.1Dedicated Hosting
5.2Managed Hosting
5.3Cloud Hosting
Chapter 6

Data Centers Colocation Market Size, Opportunities & Strategic Insights, by Organization Size

6.1Small & Medium-Sized Enterprises
6.2Large Enterprises
Chapter 7

Data Centers Colocation Market Size, Opportunities & Strategic Insights, by Industry Vertical

7.1BFSI
7.2IT & Telecom
7.3Government & Defense
7.4Healthcare
7.5Retail
7.6Manufacturing
7.7Energy & Utilities
Chapter 8

Data Centers Colocation Market, by Region

8.1North America Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.1.1U.S.
8.1.2Canada
8.2Europe Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.2.1Germany
8.2.2France
8.2.3UK
8.2.4Italy
8.2.5The Netherlands
8.2.6Rest of EU
8.3Asia Pacific Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.3.1China
8.3.2Japan
8.3.3South Korea
8.3.4India
8.3.5Australia
8.3.6Thailand
8.3.7Rest of APAC
8.4Middle East & Africa Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.4.1Saudi Arabia
8.4.2United Arab Emirates
8.4.3South Africa
8.4.4Rest of MEA
8.5Latin America Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.5.1Brazil
8.5.2Mexico
8.5.3Rest of LA
8.6CIS Data Centers Colocation Market Size, Opportunities, Key Trends & Strategic Insights
8.6.1Russia
8.6.2Rest of CIS
Chapter 9

Competitive Landscape

9.1Competitive Dashboard & Market Share Analysis
9.2Company Profiles (Overview, Financials, Developments, SWOT)
9.2.1Equinix Inc
9.2.2Digital Realty Trust Inc
9.2.3CYRUSONE Inc
9.2.4China Telecom Corporation Limited
9.2.5Global Switch
9.2.6China Unicom
9.2.7NTT Communications Corporation
9.2.8AT&T Inc
9.2.9Verizon Communications Inc
9.2.10Internap Corporation
9.2.11KDDI Corporation
9.2.12Telstra Corporation Limited