Data Center Colocation Services Market to be Worth $97.9 Billion by 2031

Meticulous Research®-a leading global market research company, published a research report titled, 'Data Center Colocation Services Market by Facility (Retail, Wholesale, Hybrid), Service (Space & Infrastructure (Rack, Cage & Cabinet, Suite), Disaster Recovery), Tier, Size, End User (Managed, Cloud, Enterprises), and Geography - Global Forecasts to 2031.'

According to this latest publication from Meticulous Research®, the global data center colocation services market is projected to reach $97.9 billion by 2031, at a CAGR of 10.7% from 2024 to 2031. The growth of this market is driven by the increasing need for efficient & secure data storage solutions, growing demand for outsourced IT infrastructure, and increasing integration of cloud computing technology. Additionally, the increasing utilization of edge data centers is expected to create market growth opportunities. However, the high upfront capital investment requirements may restrain the growth of this market. Data security and privacy concerns are major challenges for the players operating in this market.

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The global data center colocation services market is segmented by facility type, service type, tier standard, organization size, and end user. The study also evaluates industry competitors and analyzes the market at the region/country level.

Based on facility type, the global data center colocation services market is broadly segmented into retail colocation, wholesale colocation, and hybrid cloud-based colocation. In 2024, the retail colocation segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed due the growing need for cost-effective colocation services for businesses with modest space and power requirements, increasing demand for retail colocation among small & medium-sized enterprises (SMEs) for smaller increments of space and services in data centers.

However, the hybrid cloud-based colocation segment is projected to register the highest CAGR during the forecast period due to the increasing need for seamless integration between on-premises infrastructure and cloud services, the growing need for robust business continuity and disaster recovery strategies, and the growing need to enhance efficiency and resource utilization by allocating critical data on-premises within the colocation facility, while using the cloud for less sensitive data.

Based on service type, the global data center colocation services market is broadly segmented into space & infrastructure, installation & deployment services, management & support services, disaster recovery services, network connectivity & security services, operations & infrastructure services, and other colocation services. The space & infrastructure segment is sub-segmented into rack colocation, cage & cabinet colocation, suite colocation, and containment colocation. In 2024, the space & infrastructure segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed to the growing need to rent space or an enclosed cabinet within a data center to house servers and IT equipment on individual racks, increasing demand for suite colocation for an enclosed space within a data center for enhance security and access controls, and increasing demand of containment colocation to create a controlled environment for ensuring efficient airflow and cooling.

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However, the network connectivity & security services segment is projected to register the highest CAGR during the forecast period due to the growing need for low-latency network connections, increasing need for reliable connectivity to ensure optimal performance of applications and services, increasing need for robust security services to meet compliance requirements and safeguard data, and growing need for 24/7 network monitoring and support services to minimize downtime and enhance the performance and reliability of cloud environments.

Based on tier standard, the global data center colocation services market is broadly segmented into tier 1, tier 2, tier 3, and tier 4. In 2024, the tier 3 segment is expected to account for the largest share of the global data center colocation services market. Factors such as the increasing demand for higher-tier colocation services with greater availability and redundancy, lower cost compared to tier 4, with multiple power and cooling distribution paths, the rise of edge computing technology, growing need for tier 3 colocation services for SMEs with evolving IT requirements, and businesses with mission-critical applications, such as BFSI services, and large-scale e-commerce are supporting the market growth.

However, the tier 4 segment is projected to register the highest CAGR during the forecast period due to the growing demand for maximum uptime and reliability, fault tolerance against various disruptions, including power outages, equipment failures, and natural disasters, and increasing demand for tier 4 colocation services for businesses with high-density computing needs including extensive server and storage infrastructure.

Based on organization size, the global data center colocation services market is broadly segmented into small & medium-sized enterprises (SMEs) and large enterprises. In 2024, the xx segment is expected to account for the larger share of the global data center colocation services market. The segment is projected to register the highest CAGR during the forecast period. The large market share of this segment is attributed to the increasing need to optimize IT operations and infrastructure, growing demand for data center colocation services by SMEs to minimize the substantial upfront costs associated with building and maintaining an in-house data center, limited IT resources & employees, and growing need to maintain high-level security practices in industries with regulatory requirements, compliance, and data protection.

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Based on end user, the global data center colocation services market is broadly segmented into network providers, managed services providers, cloud providers, and enterprises. The enterprises segment is further segmented into retail & e-commerce, healthcare, IT & telecommunications, BFSI, media & entertainment, and other enterprises. In 2024, the enterprises segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed to the increasing need for a secure and compliant environment for hosting sensitive patient data and critical applications, the growing need to support IT & telecommunications networks, data storage, and processing requirements, and the increasing demand for coloation services in BFSI to maintain data integrity, security, and uninterrupted operations.

However, the network providers segment is projected to register the highest CAGR during the forecast period due to the growing need to ensure the security and integrity of network providers' critical infrastructure & data and the increasing use of colocation facilities near network exchange points to reduce latency, minimize service disruptions, and improve scalability & connectivity of networks while managing costs effectively.

Based on geography, the global data center colocation services market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. In 2024, North America is expected to account for the largest share of the global data center colocation services market, followed by Europe and Asia-Pacific. The large market share of North America is mainly attributed to the growing need for robust network infrastructure, low-latency connectivity, and access to a diverse ecosystem of network providers, growing emphasis on data security and compliance to safeguard sensitive data, increasing use of colocation services by enterprises to establish points of presence (PoPs) or regional data centers, host mission-critical applications, data storage, disaster recovery solutions, and enhance network infrastructure, and increasing demand for hybrid cloud and virtualization technologies.

However, the Asia-Pacific market is projected to register the highest CAGR during the forecast period. The ongoing digital transformation initiatives, increasing adoption of cloud services across various industries, growing popularity of hybrid IT models, increasing demand for colocation facilities to deliver scalable and advanced infrastructure and technology to businesses without the need for large capital investments, and growing use of colocation services by SMEs to easily expand or contract IT infrastructure as needed in the region are expected to support the growth of this market.

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Key Players:

The key players operating in the data center colocation services market are Equinix, Inc. (U.S.), Digital Realty Trust Inc. (U.S.), CyrusOne LLC (U.S.), NTT Ltd. (U.K.), CoreSite (U.S.) (a subsidiary of American Tower Corporation (U.S.)), Global Data Solutions Co., Ltd. (China), Rackspace Technology (U.S.), Colt Data Center Services Holdings (U.K.), Cologix (U.S.), China Telecom Global Limited (China), AT&T Inc. (U.S.), QTS Realty Trust, LLC (U.S.) (a subsidiary of Blackstone Inc. (U.S.)), EVODC, LLC (U.S.) (Evocative), Flexential Corp. (U.S.), Tata Communications (India), Iron Mountain, Inc. (U.S.), Hewlett Packard Enterprise Company (U.S.), Nxtra Data Limited (India) (a subsidiary of Bharti Airtel Limited), TierPoint, LLC (U.S.), Expedient (U.S.), Telehouse International Corporation of Europe Ltd (U.K.), ESDS Software Solution Ltd. (India), STT GDC Pte Ltd (Singapore), VIAVI Solutions Inc. (U.S.), SIFY TECHNOLOGIES Ltd. (India), T-Systems International GmbH (Germany), and DataBank Holdings Ltd. (U.S.).

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