Global Data Centre Colocation Market Outlook, 2030

The rapid digital transformation across industries has increased the need for robust IT infrastructure, driving demand for data centre colocation services. Companies are shifting away from investing in expensive on-premise data centres and are instead opting for colocation services that provide cost-effective, scalable, and secure solutions. By outsourcing their data storage and processing needs to third-party colocation providers, businesses can reduce upfront capital expenditure while benefiting from advanced security, uninterrupted power supply, and efficient cooling systems. The increasing adoption of cloud computing, artificial intelligence (AI), and big data analytics has further fueled the demand for colocation services. Enterprises require data storage solutions that can accommodate fluctuating workloads, and colocation services offer the flexibility to scale IT resources as needed. Additionally, as data privacy regulations become more stringent worldwide, colocation providers offer compliance-ready facilities, ensuring that businesses meet legal and regulatory standards. Another significant growth driver is the rise in hybrid IT environments. Many enterprises now use a combination of on-premise, cloud, and colocation services to optimize performance and cost. Colocation facilities often provide direct cloud connectivity, enabling businesses to seamlessly integrate public and private cloud solutions. This hybrid approach enhances operational efficiency and ensures better data management. The growing focus on sustainability is also shaping the data centre colocation market. Many providers are investing in green data centres, utilizing renewable energy sources and energy-efficient cooling systems to reduce carbon footprints. As businesses prioritize environmental responsibility, colocation providers with sustainable solutions gain a competitive advantage.

According to the research report, “Global Data Centre Colocation Market Outlook, 2030” published by Bonafide Research, the Global Data Centre Colocation market is anticipated to grow at more than 11.9% CAGR from 2024 to 2030 . This expansion is driven by the increasing reliance on digital infrastructure, exponential data generation, and the need for secure and cost-effective data storage solutions. Enterprises, cloud service providers, and content delivery networks are all contributing to this growing demand for colocation services. One of the primary drivers of this market expansion is the growing need for data centre infrastructure across industries such as IT & telecom, healthcare, banking & financial services, and e-commerce. Organizations are seeking scalable solutions that allow them to store and manage vast amounts of data without the burden of maintaining in-house data centres. The colocation model provides an attractive alternative by offering highly secure facilities with advanced cooling, power redundancy, and security protocols. Another factor influencing growth is the expansion of cloud computing and edge computing technologies. As more businesses transition to cloud-based solutions, colocation facilities provide direct cloud connectivity, reducing latency and improving performance. Additionally, the rise of 5G networks and IoT (Internet of Things) applications is generating vast amounts of data that require real-time processing, further driving the demand for colocation services. Global enterprises are also increasing their investments in disaster recovery and business continuity planning, further fueling colocation demand. By leveraging geographically dispersed colocation facilities, companies can ensure data redundancy and minimize downtime risks. The market is also witnessing increased mergers and acquisitions, with key players expanding their global footprint to meet growing demand.

Market Dynamics

Market Drivers

Growing Demand for Scalable and Cost-Effective IT Infrastructure Businesses seek colocation services to scale IT operations without incurring high capital costs. Colocation allows enterprises to expand their infrastructure based on demand while ensuring efficient resource utilization.



Increasing Adoption of Cloud Computing and Edge Data Centres The rise of cloud services and edge computing is driving demand for colocation facilities. Companies require robust data centre connectivity to optimize latency, enhance security, and support high-performance applications.

Market Challenges

High Initial Setup and Maintenance Costs for Colocation Providers Establishing a data centre colocation facility requires significant investment in power, cooling, and security infrastructure. High operational costs pose a challenge for new entrants in the market.

Data Security and Compliance Concerns in Multi-Tenant Environments Enterprises hosting critical data in shared facilities face concerns regarding cybersecurity, regulatory compliance, and data privacy. Providers must implement stringent security measures to ensure client trust.

Market Trends

Rising Investments in Green Data Centres and Renewable Energy Solutions Colocation providers are focusing on sustainability by incorporating energy-efficient designs and renewable power sources, reducing carbon footprints and operational costs.

Growing Integration of AI and Automation in Data Centre Management AI-driven predictive maintenance, automated cooling systems, and smart resource allocation are enhancing the efficiency and reliability of colocation services.

Segmentation Analysis

Retail colocation dominates the global data centre colocation market, primarily due to its affordability and flexibility, making it the preferred choice for small and medium-sized enterprises (SMEs) and startups.

Retail colocation dominates the global data centre colocation market, primarily due to its affordability and flexibility, making it the preferred choice for small and medium-sized enterprises (SMEs) and startups. Unlike wholesale colocation, which requires leasing large-scale data centre space, retail colocation enables businesses to rent smaller rack spaces while still benefiting from high-end data security, cooling, and power backup solutions. For SMEs and startups, investing in private data centres is often cost-prohibitive due to the high capital expenditure required for infrastructure, maintenance, and security. Retail colocation provides an economical alternative by offering shared infrastructure, reducing operational costs while ensuring high availability and performance. Businesses can scale their IT infrastructure incrementally as they grow, without the need for significant upfront investments. Additionally, the rise of cloud computing and hybrid IT solutions has further boosted the demand for retail colocation. Many SMEs are integrating their operations with public and private cloud services, and colocation facilities offer direct connectivity to leading cloud providers such as AWS, Microsoft Azure, and Google Cloud. This ensures seamless hybrid cloud deployment while maintaining data security and compliance with industry regulations. Security remains a key concern for businesses outsourcing their data storage, and retail colocation providers address this by implementing robust cybersecurity measures, firewalls, and 24/7 monitoring. Moreover, colocation facilities are equipped with redundancy features such as backup generators, multiple network connections, and disaster recovery solutions, ensuring business continuity even in the event of power failures or cyber threats.

Large enterprises play a crucial role in driving the growth of the global data centre colocation market due to their extensive data processing needs, high-security requirements, and demand for seamless cloud integration.

Large enterprises play a crucial role in driving the growth of the global data centre colocation market due to their extensive data processing needs, high-security requirements, and demand for seamless cloud integration. Unlike SMEs that opt for retail colocation, large corporations often require wholesale colocation, leasing entire data halls or dedicated sections of data centres to accommodate their vast IT infrastructure. This segment primarily includes industries such as banking and financial services, healthcare, telecommunications, and multinational technology firms. One of the key factors fueling colocation adoption among large enterprises is the need for scalability. As businesses expand their digital operations, they generate vast amounts of data, requiring scalable infrastructure that can support their growing workload. Wholesale colocation allows enterprises to scale their IT infrastructure on demand without the financial burden of building and maintaining proprietary data centres. Additionally, these facilities provide high bandwidth, low latency, and high computing power, ensuring optimal performance for enterprise applications. Data security and compliance are also major drivers for large enterprises in the colocation market. Companies in highly regulated sectors, such as finance and healthcare, must comply with stringent data protection laws, including GDPR, HIPAA, and PCI-DSS. Colocation providers offer state-of-the-art security measures, including biometric authentication, 24/7 surveillance, and advanced firewall protection, ensuring that enterprise data remains secure and compliant with global regulations. Furthermore, the growing adoption of hybrid and multi-cloud strategies has led enterprises to choose colocation services as a bridge between on-premise and cloud environments. Colocation data centres offer direct connectivity to public cloud providers, facilitating seamless data migration, backup, and disaster recovery solutions. This hybrid approach enhances operational flexibility while ensuring cost efficiency.

The IT and telecom industry represents the largest consumer segment in the global data centre colocation market, driven by the rapid expansion of cloud services, increasing internet penetration, and the growing need for real-time data processing.

The IT and telecom industry represents the largest consumer segment in the global data centre colocation market, driven by the rapid expansion of cloud services, increasing internet penetration, and the growing need for real-time data processing. Telecom operators, internet service providers (ISPs), and cloud service providers (CSPs) require high-performance infrastructure to support data-intensive applications such as 5G networks, IoT, and artificial intelligence (AI), making colocation an essential part of their strategy. The surge in cloud adoption has significantly boosted demand for colocation services within the IT and telecom sector. Cloud service providers, including Amazon Web Services (AWS), Microsoft Azure, and Google Cloud, rely on colocation facilities to expand their data centre footprint, ensuring low-latency connectivity and high-speed data transmission. Colocation data centres provide direct cloud on-ramps, enabling telecom companies and IT firms to seamlessly integrate cloud solutions into their infrastructure while reducing latency and improving application performance. Additionally, the rollout of 5G networks is accelerating the need for edge computing and data colocation services. 5G technology generates vast amounts of data that must be processed in real time to support applications such as autonomous vehicles, smart cities, and augmented reality (AR). Colocation providers are investing in edge data centres that enable telecom companies to store and process data closer to end users, reducing network congestion and enhancing speed. Cybersecurity is another critical factor influencing colocation adoption in the IT and telecom sector. With rising cyber threats, data breaches, and regulatory requirements, telecom operators require secure and compliant colocation facilities that offer advanced encryption, network monitoring, and multi-layered security protocols. Colocation data centres provide robust security measures, ensuring that sensitive telecom infrastructure remains protected from cyberattacks.

Regional Analysis

North America is the leading region in the global data centre colocation market, driven by its advanced digital infrastructure, widespread cloud adoption, and high data centre density.

North America is the leading region in the global data centre colocation market, driven by its advanced digital infrastructure, widespread cloud adoption, and high data centre density. The region benefits from strong investments in hyperscale and edge data centres, a well-established regulatory framework, and the presence of major colocation providers such as Equinix, Digital Realty, and CyrusOne. The demand for colocation services in North America is primarily fueled by enterprises seeking cost-effective, secure, and scalable data storage solutions. The United States, in particular, has a high concentration of technology firms, financial institutions, and healthcare organizations that require extensive IT infrastructure. Many of these enterprises are shifting from in-house data centres to colocation facilities to optimize operational costs while ensuring high performance and compliance with industry regulations. Cloud adoption is a significant factor driving the North American colocation market. The region is home to major cloud service providers, including AWS, Microsoft Azure, and Google Cloud, all of which rely on colocation facilities to expand their cloud infrastructure. With increasing demand for hybrid and multi-cloud environments, colocation providers in North America offer direct cloud connectivity solutions, ensuring seamless cloud integration for businesses. The rapid deployment of 5G networks and edge computing is further fueling colocation growth in North America. Telecom companies and IT firms are investing heavily in edge data centres to support low-latency applications such as smart cities, autonomous vehicles, and real-time analytics. These edge colocation facilities enable faster data processing closer to end users, reducing network congestion and improving application performance.

Key Developments

• March 2024: Equinix announced a $1.5 billion investment to expand its data centre colocation facilities across Asia and Europe.
• May 2024: Digital Realty introduced AI-powered cooling technology to improve energy efficiency in colocation facilities.
• July 2024: NTT Ltd. launched a new hyperscale colocation facility in North America to support high-performance cloud workloads.

Considered in this report
* Historic year: 2018
* Base year: 2023
* Estimated year: 2024
* Forecast year: 2029

Aspects covered in this report
* Data Centre Colocation Market with its value and forecast along with its segments
* Country-wise Data Centre Colocation Market analysis
* Various drivers and challenges
* On-going trends and developments
* Top profiled companies
* Strategic recommendation

By Type
• Retail Colocation
• Wholesale Colocation

By Enterprise Size
• Small and Medium Enterprises (SMEs)
• Large Enterprises

By Industry Vertical
• IT & Telecom
• BFSI
• Healthcare
• Government & Public Sector
• Media & Entertainment