The data center colocation market size is estimated to grow at a CAGR of 14.27% between 2022 and 2027. The market size is forecast to increase by USD 55,943.92 million. The growth of the market depends on several factors, including the rising demand for data center colocation facilities, the increase in business operational needs, and a growing number of mergers and acquisitions (M&As).
This data center colocation market report extensively covers market segmentation by type (retail colocation and wholesale colocation), end-user (small enterprises, medium-sized enterprises, and large enterprises), and geography (North America, APAC, Europe, Middle East and Africa, and South America). It also includes an in-depth analysis of drivers, trends, and challenges. Furthermore, the report includes historic market data from 2017 to 2021.
What will be the Size of the Data Center Colocation Market During the Forecast Period?

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Data Center Colocation Market: Key Drivers, Trends, Challenges, and Customer Landscape
The rising demand for data center colocation facilities is notably driving the market growth, although the emergence of containerized data centers may impede the market growth. Our researchers analyzed the data with 2022 as the base year, along with the key drivers, trends, and challenges. A holistic analysis of drivers will help companies refine their marketing strategies to gain a competitive advantage.
Key Data Center Colocation Market Driver
Rising demand for data center colocation facilities is notably driving the data center colocation market growth. Companies that operate colocation facilities offer many advantages over companies that build their own data centers. Colocation significantly reduces infrastructure capital expenditures and increases the connectivity needed for operational services. A colocation facility consists of private racks that a company can rent to run its IT infrastructure. The number of these institutions is growing each year rapidly. Many companies build and operate their own cloud platforms. These organizations can streamline their IT infrastructure operations to improve uptime and resource availability.
The adoption of managed hosting services is expected to increase during the forecast period with the increasing online presence of businesses in various industries. Managed hosting service providers such as Rackspace are expanding their presence globally, and this trend is expected to continue during the forecast period. Local providers of colocation and managed hosting services are driving significant investment in the market.
Significant Data Center Colocation Market Trends
Innovative approaches like submarine data centers are a key trend influencing the data center colocation market growth. Traditional data centers generate a lot of heat. Many service providers are looking to move their data centers to cooler countries to save money and investment in power and cooling systems. Cooling system accounts for 30%-40% of data center power consumption. Free cooling and liquid immersion cooling techniques are implemented in data center facilities to reduce power consumption. Many innovations have been implemented by data center service providers to improve facility efficiency. One such innovation is the undersea data center.
Microsoft provides an undersea data center and operates several meters below sea level off the Scottish archipelago of the Orkney Islands. This undersea data center consists of multiple computer racks with dozens of servers. This data center can store data and process information for up to five years without requiring maintenance. This underwater data center helps improve internet speeds in areas lacking the necessary infrastructure, making cooling easier with less investment in chillers and racks. Innovative approaches like this help reduce power consumption in data centers. Many large enterprises will prefer underwater data centers to help businesses increase internet speeds in areas lacking the necessary infrastructure. Subsea data centers are, therefore, likely to boost the market's growth during the forecast period.
Major Data Center Colocation Market Challenge
The emergence of containerized data centers is challenging the data center colocation market growth. Containerized data centers are also known as modular data centers with portable data shelves. These modular data centers can be located anywhere. Modular data centers consist of servers, storage, and networking equipment housed in shipping containers. Faced with the growing need to expand and replace existing and traditional fixed data centers, several market players are introducing new containerized data centers. For example, Schneider Electric SE launched its Edge Container Data Center, a modular data center delivered in containers. Some top companies like International Business Machines Inc. (IBM), Dell Technologies Inc. (Dell), HP Inc. (HP), and Schneider Electric SE (Schneider Electric) have implemented containerized data centers.
Portable and containerized data centers are the best solution for multiple companies that need to set up data centers in a short period of time to handle growing data volumes. Therefore, containerized data centers will hinder the growth of the market.
Key Data Center Colocation Market Customer Landscape
The report includes the adoption lifecycle of the market, covering from the innovator’s stage to the laggard’s stage. It focuses on adoption rates in different regions based on penetration. Furthermore, the report also includes key purchase criteria and drivers of price sensitivity to help companies evaluate and develop their growth strategies.

Global Data Center Colocation Market Customer Landscape
Who are the Major Data Center Colocation Market Vendors?
Vendors are implementing various strategies, such as strategic alliances, partnerships, mergers and acquisitions, geographical expansion, and product/service launches, to enhance their presence in the market.
American Tower Corp: The company offers data center colocation solutions in different regions, namely the US, Canada, Australia, Bangladesh, India, and many others.
The report also includes detailed analyses of the competitive landscape of the market and information about 15 market vendors, including:
- Brookfield Business Partners LP
- BT Group Plc
- China Telecom Corp. Ltd.
- CyrusOne Inc.
- Cyxtera Technologies Inc.
- Digital Realty Trust Inc.
- Equinix Inc.
- Flexential Corp.
- Fujitsu Ltd.
- Internap Holding LLC
- Lumen Technologies Inc.
- Nippon Telegraph and Telephone Corp.
- Stream Realty Partners LP
- Switch Inc.
- Telstra Ltd.
Qualitative and quantitative analysis of vendors has been conducted to help clients understand the wider business environment as well as the strengths and weaknesses of key market players. Data is qualitatively analyzed to categorize vendors as pure play, category-focused, industry-focused, and diversified; it is quantitatively analyzed to categorize vendors as dominant, leading, strong, tentative, and weak.
What is the Fastest-Growing Segment in the Data Center Colocation Market?
The market share growth by the retail colocation segment will be significant during the forecast period. Retail colocation is a type of data center colocation in which many companies rent space and integrate their own IT equipment, such as servers and storage devices, into racks provided by colocation providers. Retail colocation includes the process of renting racks, rack cages, and private suites in large data centers. Retail colocation facilities are leased by vendors on 1 to 3-year contracts.

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The retail colocation segment was valued at USD 15,236.83 million in 2017 and continued to grow until 2021. The market is growing due to the increasing adoption of data centers by Server Message Blocks(SMBs) choosing colocation to save both capital expenditures (CAPEX) and operating expenses (OPEX). The adoption of colocation facilities is increasing as the CAPEX and OPEX to own and maintain traditional on-premises data centers are increasing. The move to colocated data centers is steadily growing as companies gain complete control over their IT infrastructure at an affordable price. This will drive the growth of the global data center colocation market.
Which are the Key Regions for the Data Center Colocation Market?

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North America is estimated to contribute 32% to the growth of the global data center colocation market during the forecast period. Technavio’s analysts have elaborately explained the regional trends and drivers that shape the market during the forecast period.
The market in this region is expected to grow during the forecast period due to increased investment from hyper-scale cloud providers, colocation service providers, and enterprises upgrading their IT infrastructure to support edge computing, 5G, and multi-cloud services. Exponential growth in corporate and individual consumer traffic is expected to drive market growth in the region over the forecast period.
The 2020 COVID-19 outbreak accelerated the growth of cloud data centers across the world. While the telecommuting model became the new normal due to the spread of the new coronavirus infection, the introduction of cloud services and digitalization progressed, and a new business environment emerged. Additionally, different countries imposed severe restrictions on various industrial activities to curb the spread of the disease, increasing demand for digital and online transactions during lockdowns. This drove demand for automated services and solutions.
Segment Overview
The data center colocation market report forecasts market growth by revenue at global, regional & country levels and provides an analysis of the latest trends and growth opportunities from 2017 to 2027.
- Type Outlook (USD Million, 2017 - 2027)
- Retail colocation
- Wholesale colocation
- End-user Outlook (USD Million, 2017 - 2027)
- Small enterprises
- Medium-sized enterprises
- Large enterprises
- Region Outlook (USD Million, 2017 - 2027)
- Europe
- U.K.
- Germany
- France
- Rest of Europe
- South America
- Middle East & Africa
- Saudi Arabia
- South Africa
- Rest of the Middle East & Africa
Parent Market Analysis
Technavio categorizes the global data center colocation market as a part of the global data processing and outsourced services market within the global IT services market. The parent global IT services market includes companies that provide IT consulting and systems integration services, application services, electronic data processing services, business process outsourcing services, infrastructure services, and Internet services. The global data processing and outsourced services market consists of commercial electronic data processing and/or business process outsourcing providers.
Data Center Colocation Market Scope
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Report Coverage
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Details
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Page number
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165
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Base year
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2022
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Historic period
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2017-2021
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Forecast period
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2023-2027
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Growth momentum & CAGR
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Accelerate at a CAGR of 14.27%
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Market growth 2023-2027
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USD 55943.92 million
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Market structure
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Fragmented
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YoY growth 2022-2023(%)
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13.6
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Regional analysis
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North America, APAC, Europe, Middle East and Africa, and South America
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Performing market contribution
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North America at 32%
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Key countries
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US, Canada, China, UK, and Germany
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Competitive landscape
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Leading Vendors, Market Positioning of Vendors, Competitive Strategies, and Industry Risks |
Key companies profiled
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American Tower Corp., Brookfield Business Partners LP, BT Group Plc, China Telecom Corp. Ltd., CyrusOne Inc., Cyxtera Technologies Inc., Digital Realty Trust Inc., Equinix Inc., Flexential Corp., Fujitsu Ltd., Internap Holding LLC, Lumen Technologies Inc., Nippon Telegraph and Telephone Corp., Stream Realty Partners LP, Switch Inc., Telstra Ltd., Temasek Holdings Pvt Ltd., and TierPoint LLC
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Market dynamics
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Parent market analysis, Market growth inducers and obstacles, Fast-growing and slow-growing segment analysis, COVID 19 impact and recovery analysis and future consumer dynamics, Market condition analysis for forecast period
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Customization purview
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If our report has not included the data that you are looking for, you can reach out to our analysts and get segments customized.
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What are the Key Data Covered in this Data Center Colocation Market Research Report?
- CAGR of the market during the forecast period
- Detailed information on factors that will drive the growth of the data center colocation market between 2023 and 2027
- Precise estimation of the size of the data center colocation market size and its contribution of the market in focus to the parent market
- Accurate predictions about upcoming trends and changes in consumer behavior
- Growth of the market industry across North America, APAC, Europe, Middle East and Africa, and South America
- Thorough analysis of the market’s competitive landscape and detailed information about vendors
- Comprehensive analysis of factors that will challenge the growth of data center colocation market vendors
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