The global Data Center Colocation Market was valued at USD 72.5 Billion in 2024. It is forecasted to reach USD 185.0 Billion by 2033, exhibiting a compound annual growth rate (CAGR) of 11.0% during the 2025-2033 period. Growth is driven by soaring data generation from businesses, IoT devices, and cloud usage requiring scalable, reliable infrastructure, while reducing capital expenditure of private data centers. The study provides a detailed analysis of the industry, including the Data Center Colocation Market size, trends, growth, share, and industry growth forecast.
Study Assumption Years
- Base Year: 2024
- Historical Year/Period: 2019-2024
- Forecast Year/Period: 2025-2033
Data Center Colocation Market Key Takeaways
- The global data center colocation market size was USD 72.5 Billion in 2024.
- The market is projected to grow at a CAGR of 11.0% during 2025-2033.
- The forecast period spans from 2025 to 2033.
- Asia Pacific dominated the market with over 41% share in 2024, bolstered by growing internet/cloud usage and governmental digitization initiatives.
- Large enterprises held roughly 63% market share by organization size, driven by extensive IT infrastructure needs and regulatory compliance.
- Retail colocation was the leading type segment with approximately 60% market share in 2024.
- IT and telecom sector led by end use industry with about 19% market share, due to persistent data storage and connectivity demands.
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Market Growth Factors
Data is being created at an ever-increasing rate because of the proliferation of Internet of Things (IoT) devices and cloud applications. Businesses need to ensure that they have the requisite infrastructure within scalable and secure colocation facilities to store, manage and analyze the resulting data. Colocation allows customers to reduce the capital expense for constructing and operating their own data center, while operating under predictable and regular operational expenses and economies of scale.
Other concerns include energy efficiency and sustainability. Data centers account for 1% of global energy usage, driving colocation centers to adopt energy-efficient cooling, renewable energy and low carbon-action building practices. The trend is driven by regulation and consumer demand, and leads to long-term cost savings for service providers. Companies showing that they are strong on sustainability are gaining market share and better outlooks.
The growth in demand for colocation is driven by the growing hybrid cloud market where companies want the flexibility to optimize the IT infrastructure based on their demand for bandwidth, reliability, and security. The move is especially important for companies that need large private data sets or large computing capacity. Nearly 90% of enterprises adopted the cloud. Many companies also use colocation to support hybrid cloud, artificial intelligence, and other cloud-based innovations such as 5G and edge computing.
Market Segmentation
By Type:
- Retail Colocation: The largest type segment in 2024, accounting for around 60% market share. It caters predominantly to small and medium-sized businesses (SMBs), offering scalable, cost-effective, and accessible solutions with benefits like physical security, power, cooling, and connectivity.
- Wholesale Colocation
By Organization Size:
- Small and Medium Enterprises
- Large Enterprises: Leading the market with approximately 63% share in 2024 due to extensive IT infrastructure, security, and compliance needs, allowing focus on core functions and cost reduction.
By End Use Industry:
- BFSI
- Manufacturing
- IT and Telecom: Holding about 19% market share in 2024, driven by data storage, processing power, and connectivity demands for services such as cloud computing and mobile broadband.
- Energy
- Healthcare
- Government
- Retail
- Education
- Entertainment and Media
- Others
Regional Insights
In 2024, Asia Pacific had the largest market share with over 41% of the global market. Factors for the growth included increased internet and cloud adoption and digitization driven by government initiatives like China's New Infrastructure Plan and India's Digital India. Operational data center capacity in Asia Pacific totalled nearly 12GW in H1 2024. Reaching a 20% CAGR growth rate requires US$564 billion of investment over five years to 2028 (US$112 billion/year).
Recent Developments & News
On 30 May 2024, Google announced it would invest $2 Billion in Malaysia and open a new data center and Google Cloud region in the country, as well as support Malaysia's digitization with AI and other technology. On 26 April 2024, an American Tower Corporation subsidiary, CoreSite, announced its partnership with Oxide Computer Company to offer colocation services in its Silicon Valley SV2 datacenter. Data center operator CyrusOne raised $9.7 Billion in new debt capital on 8 July 2024.
Key Players
- AT&T Inc.
- CenturyLink Inc.
- China Telecom Corporation Limited
- Coresite Realty Corporation
- Cyrusone Inc.
- Cyxtera Technologies Inc.
- Digital Realty Trust Inc.
- Equinix Inc.
- Global Switch Limited
- Internap Corporation
- KDDI Corporation
- NTT Communications Corporation (Nippon Telegraph and Telephone Corporation)
- Verizon Enterprise Solutions Inc.
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