Data Center Colocation Market Analysis and Forecast, 2025-2034 | Data Center Colocation Market to Surge at 14.65% CAGR, Reaching $569.58 Billion by 2034 - ResearchAndMarkets.com

The "Data Center Colocation Market - A Global and Regional Analysis: Focus on Application, Product, and Region - Analysis and Forecast, 2025-2034" report has been added to ResearchAndMarkets.com's offering.

The global data center colocation market was valued at $130.22 billion in 2024 and is projected to grow at a CAGR of 14.65% from 2025 to 2034, reaching $569.58 billion by 2034. This rapid growth is driven by the increasing demand for secure, scalable, and cost-effective IT infrastructure solutions. As businesses embrace cloud computing, hybrid IT models, and digital transformation strategies, the need for colocation services has surged.

Data center colocation enables companies to offload the management of their IT infrastructure while benefiting from high-performance, reliable, and energy-efficient facilities. The market is also driven by the widespread adoption of edge computing and the growing emphasis on sustainability, with colocation providers integrating renewable energy sources and optimized cooling technologies to meet environmental goals.

The key players operating in the data center colocation market include Digital Realty, Equinix, Inc., Lumen Technologies, CoreSite, DataBank, Ltd., Centersquare, Flexential, MOD Mission Critical, CyrusOne, TierPoint, LLC, IPTP Networks, 365 Data Centers, EdgeConneX Inc., HostCircle Inc. and Cogent Communications. These companies have been focusing on strategic partnerships, collaborations, and acquisitions to enhance their product offerings and expand their market presence.

IT and Telecom Sector to Lead the Market (by Application)

The IT and telecom sector dominates the data center colocation market. Growing from $48.21 billion in 2023 to $256.88 billion by 2034, this segment benefits from increasing demand for cloud computing, AI-driven workloads, and edge computing infrastructure. The rapid expansion of 5G networks, IoT devices, and hyperscale data centers further drives colocation adoption in this industry.

Following closely, the banking, financial services, and insurance (BFSI) sector is also experiencing substantial growth, reaching $199.35 billion by 2034, driven by digital banking, cybersecurity needs, and real-time transaction processing. However, IT and telecom remain the dominant force, utilizing technological advancements and growing data-intensive applications to lead the global data center colocation market.

Retail Business Model to Lead the Market (by Business Model)

The retail colocation business model is projected to lead the data center colocation market, significantly outpacing wholesale colocation. Growing from $71.96 billion in 2023 to $346.64 billion by 2034, retail colocation remains the preferred choice for small and medium-sized enterprises (SMEs), startups, and organizations requiring flexible, scalable solutions.

Retail colocation provides shared infrastructure, managed services, and lower upfront costs, making it ideal for businesses transitioning to cloud-based and hybrid IT environments. In contrast, wholesale colocation, which serves large-scale enterprises, will reach $222.94 billion by 2034. Despite its growth, retail colocation dominates due to increasing edge computing demand, AI-driven workloads, and the expansion of digital-first businesses, ensuring its leadership in the market.

Segmentation by Region

North America is projected to dominate the data center colocation market, with significant growth from $37.00 billion in 2023 to $252.10 billion by 2034. The region benefits from a robust digital infrastructure, high demand for cloud services, and major tech investments. The U.S. leads in hyperscale data centers, driven by increasing enterprise adoption of hybrid cloud solutions.

Europe and Asia-Pacific will also witness substantial growth, reaching $226.76 billion and $70.88 billion, respectively, by 2034. However, North America's leadership is driven by strong AI-driven workloads, edge computing, and growing investments in renewable-powered data centers. As demand surges, North America remains the key player in shaping the future of global colocation services.

Demand - Drivers, Limitations, and Opportunities

Market Drivers: Increasing Data Center Spending

The growing demand for data centers has drawn interest from a wide range of investors, including growth capital, buyout firms, real estate, and infrastructure investors. In the U.S. market, data center demand measured by power consumption as an indicator of server capacity is expected to grow from 17 gigawatts (GW) in 2022 to 35 GW by 2030. The U.S. represents approximately 40% of the global data centers.

In July 2024, Blackstone, a major investment firm, expanded its data center portfolio with $70.0 billion allocated for future developments and its existing $55.0 billion in assets, including ongoing construction projects. AI's transformative impact is projected to drive $2.0 trillion in global data center capital expenditures over the next five years, with $1.0 trillion expected in the U.S. alone.

Due to the growing demand for data centers, the industry faces significant challenges, particularly in managing the vast amounts of data generated by modern applications. This has led to the exploration of innovative solutions to address these challenges. For instance, in August 2022, OrbitsEdge partnered with Hewlett Packard Enterprise (HPE) to develop compact data centers housed within satellites in low Earth orbit (LEO). These space-based data centers aim to process and analyze data directly in orbit, reducing the need to transmit large volumes of information back to Earth. This approach alleviates bandwidth constraints and enhances data processing efficiency for Earth observation and satellite communications applications.

Market Challenges: Power and Energy Constraints

Market challenges are centered around power and energy limitations, impacting growth due to rising power densities and energy costs. This has led to innovations such as liquid cooling and renewable energy integration, aiming to align with global sustainability mandates and address capacity demands in major regions.

Market Opportunities: Growing Demand for Different Business Models

The market opportunities lie in diverse business models, targeting both wholesale and retail customers based on their unique needs. Providers are adapting through hybrid models and flexible consumption strategies tailored to meet the requirements of cloud firms, enterprises, and service providers, enhancing market reach and competitiveness.

Competitive Strategy:

The key players in the data center colocation market analyzed and profiled in the study include professionals with expertise in the automobile and automotive domains.

Additionally, a comprehensive competitive landscape such as partnerships, agreements, and collaborations are expected to aid the reader in understanding the untapped revenue pockets in the market.

Some of the prominent names in this market are:

• Digital Realty
• Equinix, Inc.
• Lumen Technologies
• CoreSite
• DataBank, Ltd.
• Centersquare
• Flexential
• MOD Mission Critical
• CyrusOne
• TierPoint, LLC
• IPTP Networks
• 365 Data Centers
• EdgeConneX Inc.
• HostCircle Inc.
• Cogent Communications

Key Attributes:

Key Topics Covered:

1 Markets

1.1 Colocation Data Center Market Trends: Current and Future Impact Assessment

1.1.1 Data Center Capacities: Current and Future

1.1.1.1 Retrofitting and Brownfield Projects

1.1.1.2 Green Field Projects and New Installation

1.1.2 Data Center Power Consumption Scenario

1.1.3 Vacancy Rates and Absorption (by Region)

1.1.4 Key Markets to Focus on

1.1.5 Other Industrial Trends

1.1.5.1 HPC Cluster Developments

1.1.5.2 Blockchain Initiatives

1.1.5.3 Super Computing

1.1.5.4 5G and 6G Developments

1.1.5.5 Impact of Server/Rack Density

1.2 Research and Development Review

1.3 Market Dynamics Overview

1.3.1 Market Drivers

1.3.1.1 Increasing Data Center Spending

1.3.1.2 Growing Integration of AI and Cloud Computing

1.3.1.3 Sustainability and Environmental Pressures

1.3.2 Market Restraints

1.3.2.1 Power and Energy Constraints

1.3.2.2 Data Security and Compliance Challenges

1.3.3 Market Opportunities

1.3.3.1 Growing Demand for Different Business Models

1.3.3.2 Growth in AI Workloads

2 Application

2.1 Application Segmentation

2.2 Application Summary

2.3 Data Center Colocation Market (by Application)

2.3.1 BFSI

2.3.2 IT and Telecommunications

2.3.3 Government and Defense

2.3.4 Healthcare

2.3.5 Research and Academic

2.3.6 Retail, Energy, and Manufacturing

2.3.7 Others

3 Products

3.1 Product Segmentation

3.2 Product Summary

3.3 Data Center Colocation Market (by Business Model)

3.3.1 Retail

3.3.2 Wholesale

3.4 Data Center Colocation Market (by Operator Size)

3.4.1 SME and Country Level Operators

3.4.2 Enterprise and Multinational Operators

4 Regions

4.1 Regional Summary

4.2 North America

4.3 Europe

4.4 Asia-Pacific

4.5 Rest-of-the-World

5 Markets - Competitive Benchmarking and Company Profiles

• Digital Realty
• Equinix, Inc.
• Lumen Technologies
• CoreSite
• DataBank, Ltd.
• Centersquare (Cyxtera)
• Flexential
• MOD Mission Critical
• CyrusOne
• TierPoint, LLC
• IPTP Networks
• 365 Data Centers
• EdgeConneX Inc.
• HostCircle Inc.
• Cogent Communications

For more information about this report visit https://www.researchandmarkets.com/r/prirr5

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