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Data Center Colocation Market Report 2025-2034: Industry Overview, Trends, And Forecast Analysis
Data Center Colocation
How Big Is the Data Center Colocation Market Size Expected to Be by 2034?
Over the past few years, the data center colocation market has experienced significant expansion. The market size is projected to increase from $69.73 billion in 2024 to $78.74 billion in 2025, reflecting a compound annual growth rate (CAGR) of 12.9%. Factors contributing to growth during the historical period include the necessity for cost efficiency and scalability, concentration on primary business operations, disaster recovery and business continuity measures, the impacts of globalization and the need for easy access to data, as well as regulatory compliance obligations.
The forecast predicts a significant expansion in the data center colocation market in the forthcoming years, with its size likely to reach $146.27 billion by the year 2029, growing at a compound annual growth rate (CAGR) of 16.7%. The factors driving this growth in the predicted period include the progression of edge computing, a surge in internet of things (IoT) deployments, the emergence of sustainable and eco-friendly data centers, and a rising demand for managed services. The forecasted period is expected to witness certain trends such as the adoption of modular and prefabricated data centers, integration of 5G networks, the application of AI and machine learning for optimizing data centers, an increase in interconnectivity services, and a growing emphasis on disaster recovery and business continuity.
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What Are the Emerging Segments Within the 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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What Long-Term Drivers Are Shaping Data Center Colocation Market Trends?
The escalating expenses associated with running an in-house data center are driving businesses to embrace data center colocation services, thereby fueling the need for the data center colocation market. Colocation services deliver substantial cost efficiency compared to the maintenance of an in-house data center. To elaborate, the standard yearly cost of running a large data center varies between $10 million to $25 million. By utilizing data center colocation services, firms can cut down their outlay on handling and upkeep of an in-house server, subsequently diminishing the overall IT expenditure. Hence, the elevated cost of an in-house data center is amplifying the demand for expansion in the data center colocation market.
Who Are the Top Competitors in Key Data Center Colocation Market Segments?
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 Are the Major Trends Shaping the Data Center Colocation Market?
In an attempt to secure a competitive edge, leading corporations within the data center colocation sector are pouring resources into the creation of innovative solutions tailored to specific applications, such as high-density colocation for AI tasks. This is a specialist data center solution designed to meet the heavy computing and storage demands of AI applications, achieved through scalable facilities and state-of-the-art power management. Take for example DCX, a rising star in the data center field based in the United States, which unveiled it's new branding in October 2022, dedicated to high-density colocation for AI tasks. In catering to the evolving needs for digital infrastructure, DCX chose to place their first facility, DCX Goodyear 1, within the Greater Phoenix market known for AI and machine learning applications. The Goodyear 1 facility, situated on a sprawling six-acre campus in the emerging data center hub of Goodyear in Phoenix, can handle up to six megawatts of power with the potential for expansion up to 12 megawatts. Each data suite within the facility boasts a capacity of 700 kW to 1 megawatt and is equipped with vital infrastructure such as UPS and waterless cooling systems.
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Which Regions Are Becoming Hubs for Data Center Colocation Market Innovation?
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.
Frequently Asked Questions:
1. What Is the Market Size and Growth Rate of the Data Center Colocation Market?
2. What is the CAGR expected in the Data Center Colocation Market?
3. What Are the Key Innovations Transforming the Data Center Colocation Industry?
4. Which Region Is Leading the Data Center Colocation Market?
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