“Global Data Center Colocation Market to reach a market value of USD 168.68 Billion by 2031 growing at a CAGR of 15.6%”
The Global Data Center Colocation Market size is expected to reach $168.68 billion by 2031, rising at a market growth of 15.6% CAGR during the forecast period.
The increasing consumption of digital content, growth of streaming services, and demand for high-resolution video processing fueled the need for robust data storage and content delivery solutions. Thus, the media & entertainment segment held 17% revenue share market in 2023. Media and entertainment companies leverage colocation services to handle large volumes of data, ensure low-latency content delivery, and support high-performance computing for content creation and distribution.
Colocation services enhance business continuity and disaster recovery capabilities. Many enterprises utilize colocation facilities as secondary or backup data centers, ensuring redundancy in case of system failures or cyberattacks. Cloud-based disaster recovery solutions integrated with colocation infrastructure further strengthen resilience against downtime. Hence, as businesses prioritize digital transformation and hybrid cloud adoption, colocation facilities will be increasingly important in supporting these evolving IT strategies. Moreover, colocation facilities provide extensive interconnectivity options, enabling businesses to connect with multiple internet service providers (ISPs), cloud exchanges, and enterprise networks. Carrier-neutral colocation centers allow businesses to choose the best connectivity solutions, ensuring redundancy and network reliability. As global digitalization continues to accelerate, the demand for colocation facilities that offer high-speed, low-latency connectivity will continue to rise. Thus, rising data traffic and a growing need for low-latency connectivity drive the market's growth.
However, ongoing operational costs can concern businesses unfamiliar with colocation pricing models. While colocation reduces long-term infrastructure expenses, companies must still pay for rack space, power usage, and interconnectivity services. Managing these costs efficiently can be challenging for organizations without a clear colocation strategy. Without proper cost planning, businesses may find colocation expenses exceeding initial expectations, limiting their adoption in cost-sensitive markets. In conclusion, high initial setup and migration costs hinder widespread colocation adoption.
Based on colocation, the market is characterized into retail colocation and wholesale colocation. The retail colocation segment garnered 68% revenue share in the market in 2023. This growth was driven by increasing demand from small and medium-sized enterprises (SMEs) and businesses requiring scalable infrastructure with lower upfront costs. Retail colocation offers flexibility, shared facilities, and managed services, making it an attractive option for companies looking to outsource their IT infrastructure without significant capital investment.
On the basis of tier, the market is classified into tier 1, tier 2, tier 3, and tier 4. The tier 3 segment acquired 57% revenue share in the market in 2023. This dominance can be attributed to its balance between cost-effectiveness and high reliability, making it a preferred choice for businesses across various industries. Tier 3 data centers offer redundant power and cooling systems, ensuring an uptime of 99.982%, which appeals to enterprises requiring robust performance without the higher costs associated with tier 4 facilities.
By enterprise size, the market is divided into large enterprises and SMEs. The SMEs segment garnered 46% revenue share in the market in 2023. The growing adoption of cloud-based solutions, cost-effective IT infrastructure, and the need for secure data storage contributed to this growth. SMEs benefit from colocation services by leveraging shared facilities, managed services, and flexible scaling options, allowing them to focus on core business operations while minimizing IT maintenance costs.
Based on End Use, the market is segmented into retail, BFSI, IT & telecom, healthcare, media & entertainment, and others. The healthcare segment acquired 20% revenue share in the market in 2023. The rising adoption of digital health solutions, electronic health records (EHRs), and telemedicine services contributed to this growth. Healthcare providers require secure, compliant, and highly available data storage solutions to manage sensitive patient information, making colocation services attractive for ensuring data security, compliance with regulations, and seamless accessibility.
Free Valuable Insights: Global Data Center Colocation Market size to reach USD 168.68 Billion by 2031
Region-wise, the market is analyzed across North America, Europe, Asia Pacific, and LAMEA. The North America segment recorded 38% revenue share in the market in 2023. The presence of major cloud service providers, technological advancements, and increasing demand for data storage and processing capabilities drove this dominance. The region’s strong digital infrastructure, widespread adoption of AI and IoT, and high investments in hyperscale data centers further fuelled market growth. Additionally, the rising focus on energy-efficient and sustainable data center solutions expanded colocation services in North America.
| Report Attribute | Details |
|---|---|
| Market size value in 2023 | USD 53.84 Billion |
| Market size forecast in 2031 | USD 168.68 Billion |
| Base Year | 2023 |
| Historical Period | 2020 to 2022 |
| Forecast Period | 2024 to 2031 |
| Revenue Growth Rate | CAGR of 15.6% from 2024 to 2031 |
| Number of Pages | 267 |
| Number of Tables | 460 |
| Report coverage | Market Trends, Revenue Estimation and Forecast, Segmentation Analysis, Regional and Country Breakdown, Porter’s 5 Forces Analysis, Company Profiling, Companies Strategic Developments, SWOT Analysis, Winning Imperatives |
| Segments covered | Type, Enterprise Size, Tier Level, End Use, Region |
| Country scope |
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| Companies Included | Rackspace Technology, Inc., Equinix, Inc., NTT Data Corporation, Cyxtera Technologies, Inc. (BC Partners and Medina Capital), Iron Mountain, Inc., QTS Realty Trust, Inc., Cologix, Inc., China Telecom Corporation Limited, CyrusOne LLC, Zayo Group Holdings, Inc. |
By Type
By Enterprise Size
By Tier Level
By End Use
By Geography
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![North America Data Center Colocation Market Size [2031]](https://www.kbvresearch.com/upload/cover/north-america-data-center-colocation-market.jpg "North America Data Center Colocation Market Size [2031]")
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