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Data Center Colocation Market Expected to Achieve 16.7% CAGR by 2029: Growth Forecast Insights
Data Center Colocation Market
How Large Will the Data Center Colocation Market Size By 2025?
The size of the data center colocation market has swiftly expanded in recent years. Its growth is projected to rise from a valuation of $69.73 billion in 2024 to a substantial $78.74 billion in 2025, a compound annual growth rate (CAGR) of 12.9%. The expansion during the historical timeframe can be linked to factors such as cost-effectiveness and scalability demands, prioritization of key business operations, disaster recovery and business continuity, the drive towards globalization and ease of data accessibility, as well as the need to meet regulatory compliance mandates.
How Big Is the Data Center Colocation Market Size Expected to Grow by 2029?
Expectations are high for the data center colocation market, with predictions of swift expansion in the coming years. The market size is projected to reach $146.27 billion by 2029, growing at a compound annual growth rate (CAGR) of 16.7%. This growth projection for the forecast period is backed by factors such as the rise of edge computing, increased deployments of the Internet of Things (IoT), the development of sustainable and green data centers, and a growing demand for managed services. The forecast period is also anticipated to observe certain trends, including modular and prefabricated data centers, the incorporation of 5G technology, the application of AI and machine learning for data center optimization, increased interconnectivity services, and a heightened emphasis on disaster recovery and business continuity.
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Which Key Market Drivers Powering Data Center Colocation Market Expansion and Growth?
The escalating expenses associated with maintaining an internal data center are fueling a shift toward data center colocation services, thereby stimulating the data center colocation market demand. Opting for colocation services can lead to substantial financial savings compared to running an internal data center. For instance, the annual cost for operating a sizeable data center fluctuates between $10 million and $25 million. By utilizing data center colocation services, businesses can cut down their costs associated with managing and upkeeping an in-house server, thereby shrinking the overall IT expenses. Thus, the hefty cost tied to running an internal data center is spurring the growth of the data center colocation market.
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Which Fast-Growing Trends Are Poised to Disrupt the Data Center Colocation Market?
Leading firms in the data center colocation market are centering their efforts on creating superior solutions, particularly focusing intensely on high-density colocation for AI-related tasks in order to carve out a competitive edge. This high-density colocation for AI tasks introduces specialized data center solutions aimed at fulfilling the high computational and storage expectations of AI applications through adaptable infrastructure and cutting-edge power management. For instance, DCX, a new entrant in the data center industry based out of the US, debuted in October 2022 with a distinct emphasis on high-density colocation for AI workloads. Their objective is to satisfy emerging needs in the digital infrastructure sphere. Their maiden facility, DCX Goodyear 1, positioned within the Greater Phoenix market, is designed to cater to AI and machine learning (ML) applications. Situated in Goodyear, a burgeoning data center hotspot in Phoenix, Goodyear 1 is set on a six-acre plot with two active suites each capable of delivering up to six megawatts of power, and a potential to scale up to 12 megawatts. Every data suite provides a capacity from 700 kW to 1 megawatt, equipped with essential infrastructure including UPS and waterless cooling systems.
What Are the Emerging Segments in 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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Who Are the Global Leaders 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.
Which are the Top Profitable Regional Markets for the Data Center Colocation Industry?
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.
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