Data Center Colocation Market Report 2026

The data center colocation market size has grown rapidly in recent years. It will grow from $78.01 billion in 2025 to $90.48 billion in 2026 at a compound annual growth rate (CAGR) of 16%. The growth in the historic period can be attributed to rising data center costs, need for reliable power and cooling, growth of internet traffic, expansion of enterprise IT workloads, demand for secure facilities.

The data center colocation market size is expected to see rapid growth in the next few years. It will grow to $163.08 billion in 2030 at a compound annual growth rate (CAGR) of 15.9%. The growth in the forecast period can be attributed to cloud adoption growth, hyperscale demand spillover, sustainability regulations, edge computing expansion, need for low latency connectivity. Major trends in the forecast period include enterprise shift to colocation, high density rack deployment, energy efficient data center design, edge colocation expansion, interconnection focused facilities.

The rising demand for cloud adoption is expected to drive growth in the data center colocation market in the coming years. Cloud adoption refers to the process by which individuals, organizations, or businesses integrate and utilize cloud computing services and resources to enhance IT capabilities and achieve specific objectives. In data center colocation, cloud adoption provides businesses with a secure, reliable, and well-connected environment, enabling seamless integration, supporting hybrid deployments, and offering the scalability and flexibility needed in dynamic business settings. For example, in January 2025, AAG IT Services, a UK-based non-government organization, reported that in 2022, 57% of SMB workloads and 56% of SMB data were hosted in public clouds, with an additional 6% expected to migrate within the next 12 months. By 2023, approximately 63% of SMB workloads and 62% of SMB data are projected to be cloud-hosted. Therefore, the increasing demand for cloud adoption is fueling the growth of the data center colocation market.

Key companies in the data center colocation market are introducing new technologies, such as Air-Assisted Liquid Cooling (AALC), to enhance efficiency and profitability. AALC technologies in data center colocation refer to innovative cooling solutions designed to manage heat generated by servers and other electronic components more effectively. For instance, in August 2023, Digital Realty, a US-based provider of data center, colocation, and interconnection solutions, launched a high-density colocation service as part of its PlatformDIGITAL. This service addresses data and AI challenges, enabling customers to enhance AI capabilities and derive value from their data. Supporting workloads of up to 70 kilowatts per rack and available in 28 global markets, the service utilizes Air-Assisted Liquid Cooling technology. Responding to customer feedback, Digital Realty offers standardized configurations and ultra-high-power densities for rapid deployment of high-performance infrastructure worldwide.

In April 2025, Iron Mountain Incorporated, a US-based public company, acquired Web Werks India Private Limited for approximately USD 14.0 billion. Through this acquisition, Iron Mountain aims to expand its digital infrastructure footprint across India, accelerate deployment of hyperscale and AI-ready data center capacity, and integrate Web Werks’ operations into its global network to better serve cloud, enterprise, and edge customers. Web Werks India Private Limited is an India-based data center and cloud infrastructure provider specializing in data center colocation.

Major companies operating in the data center colocation market are 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.

North America was the largest region in the data center colocation market in 2025. The regions covered in the data center colocation market report are Asia-Pacific, South East Asia, 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, Taiwan, Russia, South Korea, UK, USA, Canada, Italy, Spain.

Tariffs have influenced the data center colocation market by increasing costs of imported servers, power systems, and cooling infrastructure. These impacts are most pronounced in north america and asia pacific where data center equipment supply chains are globally distributed. Higher infrastructure costs have affected colocation pricing and expansion timelines. However, tariffs have also encouraged domestic equipment sourcing and regional data center investments. This has strengthened local supply chains and supported the development of sustainable colocation facilities.

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.

Data center colocation provides physical space with power, cooling, and security for housing servers and hardware, rented to third parties for setting up their data centers.

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 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.

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