Data Center Colocation Market size was valued at USD 86 billion in 2024 and is estimated to reach USD 324.4 billion by the end of 2037, expanding at a CAGR of 11.7% during the forecast timeline, i.e., 2025-2037. In 2025, the industry size of data center colocation is assessed at USD 96 billion.
Rising investments to enhance the data center infrastructure are propelling growth in the data center colocation market. Integration of IoT devices, cloud computing, AI, data analytics, and social media has rapidly increased the workloads on individual data management systems. Thus, the inflated demand for data storage and processing is creating a surge for scalable and reliable infrastructure. Colocation service providers are equipped with advanced technologies and efficient operating techniques, making them the perfect fit for these requirements. For instance, in June 2024, a consortium of KKR and Singtel invested USD 1.3 billion in the digital infrastructure provider of Asia, STT GDC. With such funding, the leading colocation service provider plans to accelerate its international expansion.
This economic support from investors is further inspiring other competitors in the data center colocation market to magnify and improve their offerings worldwide. In addition, it brings more innovation and progress to this sector by utilizing the expertise, track record, financial strength, and proposed business strategies of investors. With such upgradation, the industry leaders are generating significant profit. For instance, in April 2022, the global colocation giant, Equinix released its financial quarter report highlighting its 77th consecutive quarter of revenue growth. The company further disclosed its earnings of over USD 1.7 billion in the first three months of 2022, marking an increment of over 2%. The report also mentioned the expansion of its global platform by signing 43 new data center projects across 20 countries.
Growth Drivers
Challenges
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Base Year |
2024 |
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Forecast Year |
2025-2037 |
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CAGR |
11.7% |
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Base Year Market Size (2024) |
USD 86 billion |
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Forecast Year Market Size (2037) |
USD 324.4 billion |
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Regional Scope |
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Colocation (Retail Colocation, Wholesale Colocation)
In terms of colocation, the retail colocation segment is set to capture data center colocation market share of over 65.1% by 2037. The facility of retailing only a required portion in the data centers typically saves a notable amount of capital for business. Due to such flexibility, they prefer to invest in this segment, rather than taking the whole room. In addition, the diverse leased spaces can range from a single rack to multiple racks, making it more useful for individuals in case of fluctuations in their trading conditions. For instance, in November 2023, Equinix announced the launch of a new IBX retail colocation facility, SL4 in Seoul, South Korea by Q1 2024. The company planned to house the new facility inside SL2x.
End use (SME, Large Enterprises)
Based on end use, the SME segment is estimated to hold a significant share in the data center colocation market by the end of 2037. The characteristics of this segment seek cost-effective solutions for any scale of data management. Their tendency to avoid capital expenditure has made the colocation services most suitable for these businesses, which are unable to afford the high upfront cost of building or maintaining their own infrastructure. Moreover, the cost sensitivity of SMEs pushes the adoption of such budget-friendly alternatives. For instance, in September 2022, Bechtle collaborated with PFALZKOM to launch its new data center in the Rhine-Neckar, offering private cloud services to benefit a range of customers, particularly SMEs.
Our in-depth analysis of the global market includes the following segments:
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Colocation |
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End use |
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Application |
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North America Market Analysis
North America data center colocation market is projected to dominate revenue share of around 43.2% by the end of 2037. Major developments and deployment of cloud infrastructure in this region is a notable growth driver of this landscape. Ongoing R&D is a crucial part of this region’s leadership in various industries, which creates a surge for efficient and reliable sources of data management solutions. This further fosters a large consumer base for this sector by acquiring investments from various research institutions. For instance, in August 2024, the Texas Advanced Computing Center (TACC) partnered with Sabey Data Centers to support their Horizon supercomputer. Being a colocation partner of TACC, the company contributes to revolutionizing the computational research of America.
The U.S. is paving the way for generating maximum revenue from the data center colocation market due to its rapid industrial growth in recent years. Thus, the increasing need for businesses to manage a large amount of data is fueling the demand for efficient and safe housing solutions. This is further inspiring leaders to expand their reach across the country, availing proper data security and connectivity. For instance, in November 2024, Cologix announced the acquisition of land in Johnstown, Ohio as a part of its strategic investment in the country’s digital infrastructure. The company plans to utilize the acquired 154 acres to build 8 AI-driven data centers, delivering a potential 800MW of scalable capacity across 2.0 million square feet.
Canada data center colocation market is highly influenced by the extensive efforts made by the country’s government to digitalize their data management infrastructure. The authorities are now investing heavily in the cloud computing industry as an initiative to promote sustainability in data centers. This further creates lucrative business opportunities for both domestic and international colocation service providers to secure a good profit margin, inspiring them to invest more in this field. For instance, in October 2023, Columbia Data Vault launched a new colocation data center in a previous Blackberry facility in Waterloo, RIM10. The strategic investment was made to move forward with AI to harness the full potential of this transformative technology.
APAC Market Statistics
The rapid growth of the data center industry in Asia Pacific is marking development and expansion in the data center colocation market. The integration of advanced technologies such as AI and machine learning has compelled the volume of data produced in every sector. This demands secure and efficient services and solutions to cope with such a large amount of data, making this region a central marketplace for global leaders. For instance, in November 2024, Digital Realty announced its continuation of expansion in Asia Pacific through strategic partnerships. The company looks forward to fueling AI innovation and future-ready digital infrastructure by availing advanced solutions such as colocation.
India has become the center of attraction for global leaders in the data center colocation market due to its remarkable progress in digitalization. The country is experiencing steady but promising economic growth, which increased the frequency of investments to improve cloud infrastructures. This is further influencing participants in this sector to leverage their business expansion across the country. For instance, in September 2021, Equinix acquired GPX India in a transaction of USD 161 million to access its fiber-connected campus in Mumbai with two data centers. This acquisition helped the company to extend its Platform Equinix by adding more than 90,000 square feet of colocation space along with an initial 1,350 and an additional 500 cabinets.
China is also progressing to be at the forefront of the regional data center colocation market with its large cloud computing, e-commerce, social media, and digital services industry. The rise of AI and IoT in these fields is generating massive amounts of data for processing and storage, creating a surge for reliable data center infrastructure. Thus, the colocation service providers play a pivotal role in managing such demand cost and energy efficiently. The increasing presence of international giants such as Microsoft Azure, AWS, and Google Cloud in this country is evidence of having potential for future growth in colocation. Moreover, the expansion strategies of global cloud and hyperscale providers are penetrating innovation in this sector.
The data center colocation market is expanding with the tendency of global leaders to set their footprint overseas. In addition, the goal of complete digitalization in developing countries such as Japan, India, China, and South Korea is paving the path to success for such participants. Many newcomers are starting their journey by localizing their network across the domestic region, inspiring other fintech companies to invest in this field. For instance, in June 2023, atNorth announced the placement of their third data center in Iceland, ICE03, having an initial capacity of 10 MW. In addition to the six facilities already operational in Iceland, the company mentioned one additional site, FIN02 to be under construction in Finland. Such key players include:
Author Credits: Abhishek Verma
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