Data Center Colocation Global Market Report 2024

The data center colocation market size has grown rapidly in recent years. It will grow from $62.46 billion in 2023 to $71.27 billion in 2024 at a compound annual growth rate (CAGR) of 14.1%. The growth observed in the historical period can be linked to the necessity for cost efficiency and scalability, a concentrated focus on core business functions, prioritization of disaster recovery and business continuity measures, the impact of globalization on data accessibility, and the need to meet regulatory compliance requirements.

The data center colocation market size is expected to see rapid growth in the next few years. It will grow to $124.15 billion in 2028 at a compound annual growth rate (CAGR) of 14.9%. Anticipated growth in the forecast period is expected to be driven by the expansion of edge computing, the increased deployment of Internet of Things (IoT) technologies, a growing emphasis on sustainability with the emergence of green data centers, and a heightened demand for managed services.

The escalating expenses associated with maintaining an in-house data center have led many companies to opt for data center colocation services, thereby driving the demand within this market segment. Colocation services offer substantial cost savings compared to the operational costs of managing an in-house data center. To illustrate, the annual operational expenses for a sizable in-house data center typically fall within the range of $10 million to $25 million. By leveraging data center colocation services, companies can significantly decrease their expenditure on managing and upkeeping internal servers, consequently reducing their overall IT costs. Hence, the heightened expenses related to in-house data centers are contributing to the increased demand for data center colocation services.

The burgeoning demand for embracing cloud technology is anticipated to drive the expansion of the data center colocation market. Cloud adoption involves integrating cloud computing services to bolster IT capabilities and meet specific goals. In the context of data center colocation, leveraging cloud adoption provides businesses with a secure, dependable, and interconnected environment. This facilitates seamless integration, supports hybrid deployments, and offers the scalability and adaptability crucial for thriving in dynamic business landscapes. As evidenced by a December 2021 survey by O’Reilly Media Inc., 90% of 2,834 global respondents currently utilize cloud-based applications. Looking ahead, 48% are planning to migrate over half of their applications to the cloud within the next year, with 20% aiming for a complete transition to cloud-based solutions. Consequently, the escalating demand for cloud adoption is a key driver propelling the growth trajectory of the data center colocation market.

The emergence of underwater data centers is significantly influencing the data center colocation market. These innovative centers leverage renewable energy generated from tides and waves, offering a sustainable approach to powering operations. By utilizing less onshore land and leveraging seawater for efficient electronics cooling, they present an eco-friendly solution. In January 2021, Beijing Highlander Digital Technology Co. and Guangzhou Shipyard International Co. jointly unveiled an underwater data center. This pioneering setup involves placing internet infrastructure, such as servers, within airtight pressure vessels submerged in the ocean, ensuring optimal cooling while reducing energy consumption. The underwater data center not only addresses environmental concerns but also stands as a sustainable solution within the data center landscape.

Key players within the data center colocation market are introducing cutting-edge technologies such as Air-Assisted Liquid Cooling (AALC) to drive their competitiveness and profitability. AALC technologies in this context are revolutionary cooling solutions specifically crafted to optimize the management of heat emanating from servers and other electronic elements within data center environments. For example, in August 2023, Digital Realty, a prominent US-based provider of data center, colocation, and interconnection solutions, unveiled a high-density colocation service under its PlatformDIGITAL umbrella. This service aims to address challenges associated with data proliferation and AI utilization, offering clients an innovative approach to amplify AI capabilities and extract maximum value from their data reservoirs.

In March 2022, Equinix Inc., a prominent US-based data center and colocation service provider, completed the acquisition of Entel's four data centers for $705 million. This strategic move by Equinix is part of its global expansion strategy, emphasizing a concentrated effort to reinforce its standing within the Latin American market. Over the past ten years, Equinix has allocated substantial investments totaling $1.2 billion in Latin America, underscoring its commitment to this region. Entel, a telecommunications firm headquartered in Chile, served as the entity divesting these data centers to Equinix, enabling Equinix to fortify its foothold and services in the dynamic Latin American market.

Major companies operating in the data center colocation market report are AT&T Inc., China Telecom Corporation Limited, NTT Ltd., Fidelity National Information Services Inc., DuPont Fabros Technology Inc., 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, Telecity Group PLC, Verizon Communications Inc.

North America was the largest region in the data center colocation market in 2023. The regions covered in the data center colocation market report are Asia-Pacific, Western Europe, Eastern Europe, North America, South America, Middle East, Africa. The countries covered in the data center colocation market report are Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Data center colocation primarily comprises retail colocation and wholesale colocation. Retail colocation involves consumers leasing space within a data center, such as rack space within a caged-off area. Enterprises of varying sizes, including large corporations and small-scale businesses, utilize these colocation services. Implementation spans across multiple industry verticals, encompassing sectors such as BFSI (Banking, Financial Services, and Insurance), IT and telecommunications, government and defense, healthcare, and various other industries seeking data center solutions.

The data center colocation market research report is one of a series of new reports that provides data center colocation market statistics, including data center colocation industry global market size, regional shares, competitors with a data center colocation market share, detailed data center colocation market segments, market trends and opportunities, and any further data you may need to thrive in the data center colocation industry. This data center colocation market research report delivers a complete perspective of everything you need, with an in-depth analysis of the current and future scenario of the industry.

The data center colocation market includes revenues earned by entities by providing bandwidth requirements while providing shared, secure spaces in cool, monitored environments that are ideal for servers. The market value includes the value of related goods sold by the service provider or included within the service offering. Only goods and services traded between entities or sold to end consumers are included.

The market value is defined as the revenues that enterprises gain from the sale of goods and/or services within the specified market and geography through sales, grants, or donations in terms of the currency (in USD, unless otherwise specified).

The revenues for a specified geography are consumption values that are revenues generated by organizations in the specified geography within the market, irrespective of where they are produced. It does not include revenues from resales along the supply chain, either further along the supply chain or as part of other products.