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Global Data Center Colocation Market Projected to Surpass $146.27 Billion by 2029 with 16.7% Annual Growth

03-11-2025 06:45 AM CET | IT, New Media & Software

Press release from: The Business Research Company

Data Center Colocation

Data Center Colocation

How Are the key drivers contributing to the expansion of the data center colocation market?
The substantial expenses associated with operating an in-house data center are driving firms to embrace colocation services for data centers, pushing the growth of the data center colocation market. Compared to owning an in-house data center, colocation services offer significant financial benefits. For example, a large data center's average annual operation costs run between $10 million and $25 million. Utilizing data center colocation services allows businesses to cut down on the expenses related to sustaining and managing an in-house server, subsequently decreasing the companies' overall IT costs. Hence, the high expenditure associated with an in-house data center is amplifying the demand for the data center colocation market's growth.

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What growth opportunities are expected to drive the data center colocation market's CAGR through 2034?
In recent years, there's been a considerable expansion in the size of the data center colocation market. The projection suggests an upward movement from $69.73 billion in 2024 to $78.74 billion in 2025, indicating a compound annual growth rate (CAGR) of 12.9%. Factors such as the need for cost efficiency and scalability, focus on essential business operations, disaster recovery and business continuity, globalization and data accessibility, and compliance with regulatory requirements were significant contributors to the growth experienced in the historic period.

In the forthcoming years, the data center colocation market is projected to witness substantial expansion. The market is anticipated to reach $146.27 billion by 2029, with a compound annual growth rate (CAGR) of 16.7%. This swift growth during the projected period can be ascribed to factors such as the expansion of edge computing, rising implementation of internet of things (IoT), sustainable and eco-friendly data centers, and a surge in the requirement for managed services. During the same period, key trends likely to influence the market include the advent of modular and prefabricated data centers, the incorporation of 5G technology, the application of AI and machine learning for data center optimization, an upsurge in interconnectivity services, and an emphasis on disaster recovery and business continuity.

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What are the emerging trends shaping the future of the data center colocation market?
Leaders in the data center colocation market, such as DCX, are looking to gain an edge over their competitors by developing cutting-edge solutions for specific areas including high-density colocation for AI workloads. These solutions, designed exclusively for data centers, aim to accommodate the comprehensive computing and storage needs of artificial intelligence applications using scalable infrastructure and superior power management systems. In a recent industry development in October 2022, the US-based startup, DCX, emerged as a fresh player in the data center field, putting a strong emphasis on high-density colocation for AI tasks. DCX is geared towards fulfilling avant-garde needs in the digital infrastructure realm. Their maiden facility, named DCX Goodyear 1, situated in the Greater Phoenix market, is poised to house applications for AI and machine learning (ML). The Goodyear 1, positioned in the expanding Phoenix data center hub of Goodyear, functions within a six-acre campus and accommodates two active suites that can support up to six megawatts of power, with scope for growth to 12 megawatts. Each data suite provides a capacity between 700 kW and 1 megawatt, armed with vital infrastructure such as UPS and waterless cooling systems.

Which growth-oriented segments of the data center colocation market are leading the industry's development?
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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What regions are leading the charge 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.

What companies are at the forefront of innovation 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.

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What Is Covered In The Data Center Colocation Global Market Report?

•Market Size Forecast: Examine the data center colocation market size across key regions, countries, product categories, and applications.
•Segmentation Insights: Identify and classify subsegments within the data center colocation market for a structured understanding.
•Key Players Overview: Analyze major players in the data center colocation market, including their market value, share, and competitive positioning.
•Growth Trends Exploration: Assess individual growth patterns and future opportunities in the data center colocation market.
•Segment Contributions: Evaluate how different segments drive overall growth in the data center colocation market.
•Growth Factors: Highlight key drivers and opportunities influencing the expansion of the data center colocation market.
•Industry Challenges: Identify potential risks and obstacles affecting the data center colocation market.
•Competitive Landscape: Review strategic developments in the data center colocation market, including expansions, agreements, and new product launches.

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