Data Center Colocation Services Market by Facility (Retail, Wholesale, Hybrid), Service (Space & Infrastructure (Rack, Cage & Cabinet, Suite), Disaster Recovery), Tier, Size, End User (Managed, Cloud, Enterprises), and Geography - Global Forecast to 2031

Data Center Colocation Services Market Size & Forecast 

The Data Center Colocation Services Market is projected to reach $97.9 billion by 2031, at a CAGR of 10.7% during the forecast period 2024–2031.

The growth of this market is driven by the increasing need for efficient & secure data storage solutions, growing demand for outsourced IT infrastructure, and increasing integration of cloud computing technology. Additionally, the increasing utilization of edge data centers is expected to create market growth opportunities. However, the high upfront capital investment requirements may restrain the growth of this market. Data security & privacy concerns are major challenges for the players operating in this market.

Growing Demand for Outsourced IT Infrastructure is Expected to Drive Market Growth

Today, several companies, including SMEs, are facing challenges, including substantial capital expenditure for building and maintaining an in-house data center and handling the evolving technologies. The costs associated with constructing a robust and reliable data center include power and cooling infrastructure, security systems, and networking equipment, which can make the process overwhelming. Thus, companies are focusing on reallocating their resources to enhance agility and responsiveness. Outsourced IT infrastructure encompasses a range of services, from cloud computing and managed hosting to data center colocation. It relies on external service providers for the management, maintenance, and provision of various IT components and services.

Data center colocation services provide companies with a cost-effective and efficient solution for hosting their IT infrastructure. These facilities adhere to industry standards and certifications and are equipped with advanced security measures, including surveillance systems, access controls, and physical security measures that ensure the protection of sensitive data. Hence, the growing demand for outsourcing IT infrastructure, facilitated by services such as data center colocation for improved efficiency, flexibility, and resource optimization is further supporting the overall market growth in the coming years.

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Key Findings in the Data Center Colocation Services Market Study:

In 2024, the Retail Colocation Segment is Expected to Dominate the Data Center Colocation Services Market

Based on facility type, the global data center colocation services market is broadly segmented into retail colocation, wholesale colocation, and hybrid cloud-based colocation. In 2024, the retail colocation segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed due the growing need for cost-effective colocation services for businesses with modest space and power requirements, increasing demand for retail colocation among small & medium-sized enterprises (SMEs) for smaller increments of space and services in a data center.

However, the hybrid cloud-based colocation segment is projected to register the highest CAGR during the forecast period due to the increasing need for seamless integration between on-premises infrastructure and cloud services, the growing need for robust business continuity and disaster recovery strategies, and the growing need to enhance efficiency and resource utilization by allocating critical data on-premises within the colocation facility, while using the cloud for less sensitive data.

In 2024, the Space & Infrastructure Segment is Expected to Dominate the Data Center Colocation Services Market

Based on service type, the global data center colocation services market is broadly segmented into space & infrastructure, installation & deployment services, management & support services, disaster recovery services, network connectivity & security services, operations & infrastructure services, and other colocation services. The space & infrastructure segment is sub-segmented into rack colocation, cage & cabinet colocation, suite colocation, and containment colocation. In 2024, the space & infrastructure segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed to the growing need to rent space or an enclosed cabinet within a data center to house servers and IT equipment on individual racks, increasing demand for suite colocation for an enclosed space within a data center for enhance security and access controls, and increasing demand of containment colocation to create a controlled environment for ensuring efficient airflow and cooling.

However, the network connectivity & security services segment is projected to register the highest CAGR during the forecast period due to the growing need for low-latency network connections, the increasing need for robust security services to meet compliance requirements and safeguard data, and the growing need for 24/7 network monitoring and support services to minimize downtime and enhance the performance and reliability of cloud environments.

In 2024, the Tier 3 Segment is Expected to Dominate the Data Center Colocation Services Market

Based on tier standard, the global data center colocation services market is broadly segmented into tier 1, tier 2, tier 3, and tier 4. In 2024, the tier 3 segment is expected to account for the largest share of the global data center colocation services market. Factors such as the increasing demand for higher-tier colocation services with greater availability and redundancy, lower cost compared to tier 4, with multiple power and cooling distribution paths, the rise of edge computing technology, growing need for tier 3 colocation services for SMEs with evolving IT requirements, and businesses with mission-critical applications, such as financial services, healthcare, and large-scale e-commerce are supporting the market growth.

However, the tier 4 segment is projected to register the highest CAGR during the forecast period due to the growing demand for maximum uptime and reliability, fault tolerance against various disruptions, including power outages, equipment failures, and natural disasters, and increasing demand for Tier 4 colocation services for businesses with high-density computing needs including extensive server and storage infrastructure.

In 2024, the Small & Medium-Sized Enterprises Segment is Expected to Dominate the Data Center Colocation Services Market

Based on organization size, the global data center colocation services market is broadly segmented into small & medium-sized enterprises (SMEs) and large enterprises. In 2024, the small & medium-sized enterprises (SMEs) segment is expected to account for the larger share of the global data center colocation services market. The segment is projected to register the highest CAGR during the forecast period. The large market share of this segment is attributed to the increasing need to optimize IT operations and infrastructure, growing demand for data center colocation services by SMEs to minimize the substantial upfront costs associated with building and maintaining an in-house data center, limited IT resources & employees, and growing need to maintain high-level security practices in industries with regulatory requirements, compliance, and data protection.

In 2024, the Enterprises Segment is Expected to Dominate the Data Center Colocation Services Market

Based on end user, the global data center colocation services market is broadly segmented into network providers, managed services providers, cloud providers, and enterprises. The enterprises segment is further segmented into retail & e-commerce, healthcare, IT & telecommunications, BFSI, media & entertainment, and other enterprises. In 2024, the enterprises segment is expected to account for the largest share of the global data center colocation services market. The large market share of this segment is attributed to the increasing use of colocation services to ensure reliable & scalable infrastructure, the increasing need for a secure and compliant environment to host sensitive patient data and critical applications, the growing need to support IT & telecommunications networks, data storage, and processing requirements.

However, the network providers segment is projected to register the highest CAGR during the forecast period due to the growing need to ensure the security and integrity of network providers' critical infrastructure data and increasing use of colocation facilities near network exchange points to reduce latency, minimize service disruptions, and improve scalability & connectivity of networks while managing costs effectively.

Asia Pacific to be the Fastest Growing Regional Market

Based on geography, the global data center colocation services market is segmented into North America, Europe, Asia-Pacific, Latin America, and the Middle East & Africa. Asia-Pacific is projected to register the highest CAGR during the forecast period due to The ongoing digital transformation initiatives, increasing adoption of cloud services across various industries, growing popularity of hybrid IT models, increasing demand for colocation facilities to deliver scalable and advanced infrastructure and technology to businesses without the need for large capital investments, and growing use of colocation services by SMEs to easily expand or contract IT infrastructure as needed in the region are expected to support the growth of this market.

Data Center Colocation Services Market: Key Companies

The report includes a competitive landscape based on an extensive assessment of the key growth strategies adopted by the leading market participants in the data center colocation services market in the last three to four years. The key players profiled in the data center colocation services market report are Equinix, Inc. (U.S.), Digital Realty Trust Inc. (U.S.), CyrusOne LLC (U.S.), NTT Ltd. (U.K.), CoreSite (U.S.) (a subsidiary of American Tower Corporation (U.S.)), Global Data Solutions Co., Ltd. (China), Rackspace Technology (U.S.), Colt Data Center Services Holdings (U.K.), Cologix (U.S.), China Telecom Global Limited (China), AT&T Inc. (U.S.), QTS Realty Trust, LLC (U.S.) (a subsidiary of Blackstone Inc. (U.S.)), EVODC, LLC (U.S.) (Evocative), Flexential Corp. (U.S.), Tata Communications (India), Iron Mountain, Inc. (U.S.), Hewlett Packard Enterprise Company (U.S.), Nxtra Data Limited (India) (a subsidiary of Bharti Airtel Limited), TierPoint, LLC (U.S.), Expedient (U.S.), Telehouse International Corporation of Europe Ltd (U.K.), ESDS Software Solution Ltd. (India), STT GDC Pte Ltd (Singapore), VIAVI Solutions Inc. (U.S.), SIFY TECHNOLOGIES Ltd. (India), T-Systems International GmbH (Germany), and DataBank Holdings Ltd. (U.S.).

Data Center Colocation Services Market Report Summary:

Key questions answered in the report: