What Has Been The Historical And Current Growth Of The Data Center Colocation Market?
The data center colocation market has seen considerable growth due to a variety of factors.
• The size of the data center colocation market has seen a swift expansion over the recent years. The market, currently valued at $69.73 billion in 2024, is projected to escalate to $78.74 billion in 2025, reflecting a compound annual growth rate (CAGR) of 12.9%.
Factors contributing to this growth in the historic period include cost efficiency and scalability demands, emphasis on integral business operations, the need for disaster recovery and business continuity, globalisation and easy access to data, as well as adherence to regulatory compliance obligations.
What Does the Future Hold for the Data Center Colocation Market?
The data center colocation market is expected to maintain its strong growth trajectory in upcoming years.
• The colocation market for data centers is predicted to experience a swift expansion in the coming years. It's forecasted to reach $146.27 billion by 2029, growing at a compound annual growth rate (CAGR) of 16.7%.
This predicted surge during the forecast period is attributable to factors like the proliferation of edge computing, the rise in Internet of Things (IoT) deployments, focus on sustainable and green data centers, and a growing demand for managed services. Trends expected to shape this period involve modular and pre-built data centers, the incorporation of 5G technology, the application of AI and machine learning for optimization of data centers, an increase in interconnectivity services, and a heightened emphasis on disaster recovery and business continuity.
What Are The Primary Growth Drivers In The Data Center Colocation Market?
The substantial expense associated with running an in-house data center is driving companies to utilize data center colocation services, thereby fueling the growth of the data center colocation market. These colocation services afford companies significant cost-cutting benefits as opposed to maintaining an in-house data center. As an example, it typically costs between $10 million and $25 million per year to operate a large data center. However, by leveraging colocation services for data centers, businesses can decrease the money spent on the management and upkeep of an in-house server. This, in turn, brings down the overall IT expenditures of the companies. Consequently, the steep cost of an in-house data center is amplifying the demand for growth in the data center colocation market.
What Are The Primary Segments In The Global Data Center Colocation Market?
The data center colocation market covered in this report is segmented –
1) By Type: Retail Colocation, Wholesale Colocation
2) By Enterprise Size: Large Enterprise, Small Scale Enterprise
3) By End-User: BFSI, IT And Telecom, Government And Defense, Healthcare, Other End Users
Subsegments:
1) By Retail Colocation: Single Cabinets, Half Cabinets, Full Cabinets, Caged Space, Custom Suites
2) By Wholesale Colocation: Private Data Center Suites, Dedicated Data Center Space, Large-Scale Colocation
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Which Key Trends Are Driving Changes In The Data Center Colocation Market?
Leading firms in the data center colocation industry are concentrating on the creation of innovative solutions for particular applications, such as high-density colocation specifically designed for AI workloads, in an effort to stay competitive. High-density colocation for AI workloads provides unique data center solutions which cater to the intense processing and storage demands of AI applications, utilizing scaleable infrastructure and sophisticated power management systems. DCX, an American data center startup, exemplified this in October 2022 when it introduced itself as a new data center brand emphasising on high-density colocation for AI workloads. DCX's aim is to fulfill the state-of-the-art needs of digital infrastructure. Their first facility, DCX Goodyear 1, is set in the wider Phoenix market and is primed to host AI and ML applications. Goodyear 1, situated in the burgeoning data center hub of Goodyear in Phoenix, is housed in a sprawling six-acre campus with two operational suites capable of supporting six megawatts of power with a potential upgrade to 12 megawatts. Each suite provides a capacity ranging from 700 kW to 1 megawatt, complete with vital infrastructure including UPS and water-free cooling systems.
Who Are the Key Players in the Data Center Colocation Market?
Major companies operating in the data center colocation market include:
• AT&T Inc.
• China Telecom Corporation Limited
• NTT Ltd.
• Element Critical
• Global Switch Limited
• Equinix Inc.
• Iron Mountain Incorporated
• Digital Realty Trust Inc.
• Rackspace Technology Inc.
• Zayo Group Holdings Inc.
• CyrusOne Inc.
• CoreSite Realty Corporation
• Sungard AS
• Cyxtera Technologies Inc.
• Switch Ltd.
• QTS Realty Trust Inc.
• EdgeConneX Inc.
• Aligned Energy LLC
• Netrality Data Centers Inc.
• Evoque Data Center Solutions
• 365 Data Centers
• Stream Data Centers
• Compass Datacenters LLC
• ServerFarm LLC
• Digital Fortress Inc.
• RagingWire Data Centers Inc.
• DataBank Inc.
• Sabey Data Centers LLC
• Verizon Communications Inc.
What Is The Most Dominant Region In The Data Center Colocation Market?
North America was the largest region in the data center colocation market in 2024. The regions covered in the data center colocation market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
