Data Centre Colocation Market

Data Centre Colocation Market Outlook for (2024 to 2034)

The data centre colocation market is estimated to be valued at USD 69.7 billion in 2024. The data centre colocation market is expected to reach USD 279.1 billion by 2034, developing at a CAGR of 14.9%.

Data centre colocation providers offer high levels of reliability and redundancy through robust infrastructure, backup power systems, and security measures. This attracts businesses looking for uninterrupted operations and data protection.

The rise of edge computing, which involves processing data closer to the point of generation or consumption, is boosting the demand for smaller, distributed data centres. Colocation providers are strategically expanding their facilities to cater to this trend.

The proliferation of IoT devices and the increasing volume of data generated require efficient and high-capacity storage solution are expected to drive the demand for data centre colocation market.

Environmental concerns are prompting colocation providers to focus on sustainability. Efforts include using renewable energy sources, implementing energy-efficient technologies, and adopting green data centre practices to reduce their carbon footprint.

Data Centre Colocation Market Trend Analysis

• The proliferation of IoT devices necessitates robust data centres capable of handling vast amounts of data generated by connected devices
• Growth in AI, machine learning, and big data analytics drives demand for colocation services with high-performance computing capabilities and large-scale data processing capabilities.
• The growing concerns about data breaches and cyber threats drive demand for colocation facilities with robust security protocols

Attributes	Key Insights
Data Centre Colocation Market Estimated Size in 2024	USD 69.7 billion
Projected Market Value in 2034	USD 279.1 billion
Value-based CAGR from 2024 to 2034	14.9%

2019 to 2023 Historical Analysis vs. 2024 to 2034 Market Forecast Projections

Between 2019 and 2023, global data centre colocation market registered a CAGR of 12.6%. The increasing adoption of data centre colocation in small and large enterprises are expected to drive the market growth during the forecast period.

The growing need for scalable and efficient IT infrastructure are driving the need for data centre colocation. Increasing advancements in technology, such as virtualization, cloud computing, and high-speed connectivity, influenced colocation services.

Adherence to specific regulations regarding data sovereignty and compliance will remain a priority. Colocation providers will offer solutions tailored to meet diverse regulatory requirements across regions. The demand for data centre colocation is projected to rise at a CAGR of 14.9% from 2024 to 2034.

Market Value 2023	USD 61.5 billion
Market Value in 2034	USD 69.7 billion

Data Centre Colocation Market Growth Drivers

• Increasing digitalization across industries has fueled the demand for data storage and processing. Companies are adopting cloud services and outsourcing their IT infrastructure to colocation facilities to support their digital transformation efforts.
• Colocation allows businesses to save on upfront capital expenditures for building and maintaining their own data centres.
• Colocation allows for lease space, power, and cooling infrastructure and reducing operational costs drives their demand in industries.
• Colocation facilities offer scalable solutions that can adapt to changing business needs. Companies can easily scale their IT infrastructure up or down without significant investments in physical infrastructure.

Data Centre Colocation Market Restraints

• Moving existing infrastructure to a colocation facility can pose logistical challenges, including downtime, data migration complexities, and potential disruptions during the transition.
• Relying on third-party colocation providers introduces a level of dependency. Service interruptions or issues on the provider's end can impact the business operations of their clients.
• Availability and space within colocation facilities may become constrained. Limited capacity can restrict the options for businesses seeking colocation services in specific geographic areas.
• Stringent government regulation and policies are likely to pose challenge to market growth High maintenance and startup cost may impede the market demand.

Country-wise Analysis

The following table shows the top five countries by revenue, led by Australia and Japan. Colocation facilities complement cloud strategies by providing hosting options, connectivity, and hybrid solutions for businesses leveraging cloud services in Australia. These two countries are predicted to boost their data centre colocation efforts through 2034.

Forecast CAGRs from 2024 to 2034

Japan	16.1%
The United States	12.7%
China	15.4%
Australia	18.4%
Germany	14.4%

The Growing Adoption of Cloud Services Are Driving the Demand for Data Centre Colocation in United States

The data centre colocation market in United States is expected to witness a CAGR of 12.7% by 2034.The market size has been growing steadily due to increased digitization across industries, the adoption of cloud services, and the demand for scalable and reliable data infrastructure.

The demand for data centre colocation services in the United States is fueled by factors such as cloud adoption, IoT proliferation, edge computing requirements, content delivery networks (CDNs), and the need for robust connectivity.

The data centre colocation market in United states is continues to evolve, driven by technological advancements, changing business needs, and the growing importance of reliable, scalable, and secure data infrastructure.

The Rapid Growth of Big Data and Analytics are driving Demand in Germany

Data centre colocation market in Germany is expected to grow with a CAGR of 14.4% from 2024 to 2034. The rising proliferation of IoT devices, along with the growth of big data and analytics, generates vast amounts of data driving the need for colocation facilities that provide the necessary infrastructure to manage and process this data efficiently.

Germany places emphasis on sustainability and green initiatives. Colocation providers focusing on energy-efficient data centres and renewable energy sources align with the country's environmental goals.

The Growing Digitalization in China to Drive the Market Demand

Increasing adoption of cloud services in China necessitates reliable data centres to support cloud infrastructure. Colocation facilities complement cloud strategies, providing connectivity and hosting options for businesses leveraging cloud solutions. The data centre colocation market in China is projected to rise at a CAGR of 15.4% from 2024 to 2034.

China has specific data localization laws requiring certain types of data to be stored within the country's borders driving the demand for colocation services that comply with these regulations attract businesses seeking to adhere to local data sovereignty requirements.

China has a thriving e-commerce ecosystem and a vast digital market are expected to boost the demand for data centre colocation services. Increasing government initiatives supporting technology development and digital innovation drives the demand for advanced data infrastructure.

Increasing Cloud Adoption in Japan to Boost the Market Growth

The data centre colocation market in Japan is projected to rise at a CAGR of 16.1% from 2024 to 2034. Japan is embracing IoT and Industry 4.0 technologies across manufacturing and other industries.

Colocation services provide the necessary infrastructure to support IoT deployments and data processing requirements. Colocation centres leverage infrastructure to provide high-speed connectivity and low-latency networks, attracting businesses that require efficient data transmission.

The Growing Technological Advances in Australia Drive the Market Demand

The demand for data centre colocation is expected to rise in Australia. By 2034, the market is expected to expand at a CAGR of 18.4%. Australia has a competitive market with several major colocation providers offering a range of services and solutions, leading to innovation, competitive pricing, and diverse offerings for businesses.

With a growing focus on sustainability, colocation providers in Australia are increasingly adopting renewable energy sources and energy-efficient technologies to reduce their environmental impact.

Government support for technology innovation and digital transformation initiatives further drives the demand for advanced data infrastructure, creating opportunities for colocation providers to support these initiatives.

Category-wise Insights

According to market forecasts, the large enterprises segment will dominate until 2034, with a market share of 63.0%. For large enterprises with extensive IT needs, colocation offers economies of scale, reducing operational costs related to infrastructure maintenance, cooling, power, and staffing. The 3-tier segment is expected to have a share of 45.0%. The 3-tier architecture facilitates easier integration with different technologies or systems.

Category	Market share
Large Enterprises	63.0%
3-tier	45.0%

Deployment of Data Centre Colocation is high in Large Enterprises

The large enterprise segment accounted for the maximum share of 63.0% of the overall revenue in 2024. Increasing demand in large business for managing and maintaining data efficiently.

Increasing extensive IT needs, colocation offers economies of scale, reducing operational costs related to infrastructure maintenance, cooling, power, and staffing in large enterprises.

3-tier Segment Driving Growth with a Sizeable Market Share

The tier 3 segment accounted for the largest share of around 45% of the overall revenue in 2024 and is projected to continue growing over the forecast period.

The 3-tier architecture facilitates easier integration with different technologies or systems. The modular nature of this architecture often allows for smoother integration of new components or technologies into specific layers. The 3-tier colocation data centres provide some significant benefits such as high availability, scalability, redundant infrastructure and enhanced security.

Comparative Landscape

The data centre colocation market is fragmented. Competitive landscape featuring various global and regional players. The market players are using strategies, such as product launches, collaborations, and partnerships, to survive the highly competitive environment and expand their business footprints. Some of the leading players operating in the global data centre colocation market are as follows

• China Telecom Corporation Ltd.
• Cologix
• Colt Technology Services Group Ltd.
• CoreSite
• CyrusOne
• Cyxtera Technologies Inc.
• Digital Realty Trust
• Equinix, Inc.
• Iron Mountain Inc.
• NTT Ltd.
• QTS Realty Trust, LLC
• Rackspace Technology
• Telehouse
• Zayo Group LLC

Some of the developments in the market are as follows

• Equinix is a global leader in colocation services, operating in multiple countries with a vast network of interconnected data centres. The company's focus on interconnection services, providing direct connections between various cloud providers, enterprises, and networks, has been a driving force in shaping the market.
• Digital RealtyTrust known for its extensive global footprint, Digital Realty has been instrumental in developing large-scale data centre campuses worldwide. The company's focus on providing flexible and scalable solutions to meet diverse customer needs has contributed to the evolution of the colocation market.

Report Scope

Attributes	Details
Estimated Market Size in 2024	USD 69.7 billion
Projected Market Valuation in 2034	USD 279.1 billion
Value-based CAGR 2024 to 2034	14.9%
Forecast Period	2024 to 2034
Historical Data Available for	2019 to 2023
Market Analysis	Value in USD billion
Key Regions Covered	North America; Latin America; Western Europe; Eastern Europe; South Asia and Pacific; East Asia; Middle East and Africa
Key Market Segments Covered	Type, End Use; Application; Region
Key Countries Profiled	The United States, Canada, Brazil, Mexico, Germany, The United Kingdom, France, Spain, Italy, Russia, Poland, Czech Republic, Romania, India, Bangladesh, Australia, New Zealand, China, Japan, South Korea, GCC countries, South Africa, Israel
Key Companies Profiled	China Telecom Corporation Ltd.; Cologix; Colt Technology Services Group Ltd.; CoreSite; CyrusOne; Cyxtera Technologies, Inc.; Digital Realty Trust; Equinix, Inc.; Iron Mountain Inc.; NTT Ltd.; QTS Realty Trust, LLC; Rackspace Technology; Telehouse; Zayo Group LLC.

Data Centre Colocation Market Key Segments

By Type:

• Retail colocation
• Wholesale colocation

By End Use:

• SMEs
• Large Enterprises

By Application:

• BFSI
• Energy
• Government & Defense
• Healthcare
• Manufacturing
• IT & Telecom
• Retail

By Region:

• North America
• Latin America
• Western Europe
• Eastern Europe
• South Asia and Pacific
• East Asia
• Middle East and Africa

Frequently Asked Questions

What is the expected worth of the data centre colocation market in 2024?

As of 2024, the market for data centre colocation is expected to be valued at US$ 69.7 billion, as per FMI.

According to FMI, what is the anticipated market value for data centre colocation in 2034?

By 2034, the market value of data centre colocation is expected to reach US$ 279.1 billion.

What is the projected forecast CAGR for the data centre colocation market from 2024 to 2034?

From 2024 to 2034, data centre colocation are expected to flourish at a CAGR of 14.9%

Based on end-use, which segment dominates the data centre colocation market?

The large enterprises segment is expected to account for a market share of 63.0% in 2024.

Which country is likely to be at the pinnacle of the market?

The Australia is likely the top-performing market with a CAGR of 18.4%.