The data center colocation market is expected to grow at a compound annual growth rate (CAGR) of 14.4% from its anticipated USD 104.2 billion in 2025 to USD 204.4 billion by 2030. Higher-density AI and high-performance computing workloads are becoming more and more demanding, and power and cooling capacity—rather than just rack space—is becoming a crucial differentiator. Businesses today need liquid-cooled settings that can handle 40–60 kW per rack. Furthermore, because they offer low-latency Layer-2 connectivity across on-premises facilities, colocation centers, and several cloud regions, hybrid-multicloud interconnection ecosystems have become indispensable. AI applications can move data with high performance and efficiency thanks to this configuration. The development of data sovereignty laws in Europe, India, and Australia is driving up investment in jurisdiction-secure, compliant hosting facilities that fetch high prices and long-term agreements.
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General Purpose IT will register the largest market share during the forecast period
General purpose IT, encompassing standard compute, storage, and networking workloads, is the largest workload type segment in the data center colocation market during the forecast period, driven by enterprises’ ongoing digital transformation initiatives and cloud migration strategies. Businesses of all sizes continue to deploy mission-critical applications ERP, CRM, virtualization platforms, and web hosting on colocation infrastructure to ensure high availability and cost predictability. As hybrid IT architectures become mainstream, companies favor colocation partners that offer seamless integration with public clouds and private environments. Meanwhile, demand for HPC & AI workloads is growing rapidly, spurred by high-performance analytics and machine-learning projects, but it remains a smaller segment due to specialized infrastructure requirements and higher power densities. The ubiquity of general purpose IT workloads, flexible pricing models, scalable power options, and robust service-level agreements, underpins its dominant market share.
Hyperscalers is poised for fastest growth rate during the forecast period
Hyperscaler, as the fastest-growing end-user segment in the data center colocation market during the forecast period, is expanding rapidly due to its enormous demand for scalable capacity, advanced automation, and energy-efficient infrastructure. Leading cloud providers and large digital platforms increasingly rely on colocation partners to support bursting workloads, accelerator-heavy computing, and global expansion without the capital-intensive burden of self-building. Hyperscalers benefit from standardized, high-density rack deployments, direct interconnection ecosystems, and co-located edge sites that reduce latency for latency-sensitive applications.
Enterprises typically seek flexible contract terms, managed services, and regional coverage to complement their on-premises data centers. The combination of hyperscalers’ need for modular growth, sustainability targets, and integrated service offerings underscores their role as the primary catalyst for segmental expansion.
North America will account for the largest market during the forecast period
North America will likely be the largest regional segment in the data center colocation market during the forecast period, driven by widespread enterprise and hyperscaler investments in cloud and edge infrastructure. The US and Canada host the highest concentration of colocation facilities, offering robust interconnection hubs, advanced network density, and integrated service portfolios. Key industries, including technology, finance, healthcare, and media, rely on North American colocation providers for rapid deployment, strict data sovereignty compliance, and scalable capacity to support peak workloads. In addition, aggressive renewable energy targets and sustainability initiatives are prompting operators to adopt high-efficiency cooling and green power procurement. Europe follows as the second-largest market, with growth fueled by GDPR compliance and expanding hyperscaler footprints in major hubs like Frankfurt and London. North America’s mature regulatory framework, high IT spending per capita, and leading-edge ecosystem ensure it will retain the largest share of the regional segment.
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Unique Features in the Data Center Colocation Market
Data center colocation providers offer facilities in strategic global locations, enabling enterprises to place infrastructure closer to their customer base for lower latency, regulatory compliance, and improved service delivery. This global footprint supports hybrid and multi-cloud environments.
Colocation data centers allow clients to scale IT infrastructure up or down without the capital expenditure associated with building and maintaining private data centers. Providers offer flexible rack space, power configurations, and connectivity to support evolving business needs.
A key differentiator in the colocation market is carrier neutrality, where facilities provide access to multiple internet service providers and network carriers. This fosters competitive pricing, redundancy, and better performance for enterprise workloads.
Colocation facilities integrate multi-layered security protocols, including biometric access controls, 24/7 surveillance, mantraps, and fire detection systems. These security measures ensure data and equipment are protected against physical threats.
Major Highlights of the Data Center Colocation Market
The data center colocation market is experiencing significant growth due to the increasing adoption of cloud services, edge computing, and digital transformation initiatives. Enterprises are shifting from on-premises data centers to colocation for greater agility, scalability, and efficiency.
Hyperscale companies, such as cloud service providers and tech giants, are driving demand for large-scale colocation facilities. These clients seek customized solutions with high power density, dedicated space, and robust connectivity to support intensive workloads and big data analytics.
Environmental sustainability is a central theme, with providers investing in renewable energy sources, green building certifications, and innovative cooling technologies. These efforts align with global ESG (Environmental, Social, and Governance) goals and appeal to eco-conscious customers.
The colocation market is expanding rapidly in emerging economies across Asia-Pacific, Latin America, and Africa. Improved internet penetration, growing digital infrastructure, and government initiatives are fueling demand in these regions, making them key growth frontiers.
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Top Companies in the Data Center Colocation Market
Some of the major players in the cloud computing market include Equinix (US), Digital Realty (US), NTT Data (Japan), QTS Data Centers (US), and KDDI Corporation (Japan). These companies use and provide colocation services to move fast, innovate, and stay connected with customers worldwide. It helps them harness AI, manage massive data, and create smarter, more seamless experiences, such as recommending shows, processing payments, or running voice assistants. Colocation services give them the flexibility and power to keep evolving and delivering at scale.
EQUINIX
Equinix is a global real estate investment trust specializing in interconnected colocation services, operating over 260 IBX data centers across 33 countries. The company’s strategy revolves around a software-defined interconnection fabric, such as ECX Fabric, that unifies global data centers and leverages scale through targeted mergers & acquisitions. The company’s core competencies include carrier-neutral ecosystems, access to over 3,000 cloud and network providers, AI-powered monitoring, high-density liquid cooling, and strong sustainability practices using 96?percent renewable energy. In April 2024, Equinix and PGIM Real Estate entered into a USD 600 million joint venture to develop and operate the first xScale data center in the US, located in Silicon Valley. The facility, named SV12x, is designed to provide over 28 MW of power capacity upon completion, catering to the growing demand for hyperscale data center infrastructure. Equinix combines horizontal integration by expanding its geographic footprint via acquisition with vertical integration through its Cloud Exchange, software-defined services, and managed offerings, enabling seamless hybrid and multi-cloud deployments with centralized orchestration and high operational resilience.
DIGITAL REALTY
Digital Realty is a global provider of carrier-neutral data centers and interconnection services, managing over 300 facilities across more than 25 countries. The company’s strategy centers on PlatformDIGITAL, which offers modular, AI-ready data halls, build-to-suit data centers, and renewable energy sourcing. Core strengths include scalable high-density power usage, strong interconnection frameworks, and a commitment to sustainability through green energy and carbon-neutral builds. In July 2024, Digital Realty acquired a colocation data center campus in Slough, UK, for USD 200 million. This acquisition enhances Digital Realty’s colocation capabilities in the London market, providing customers with expanded access to interconnected colocation services and supporting the growing demand for digital infrastructure in the region. Digital Realty pursues horizontal integration through acquisitions to enhance geographic coverage and vertical integration by controlling critical infrastructure layers, including power, cooling, and interconnect stack, allowing consistent delivery of compliant, reliable, and energy-efficient colocation services worldwide.
NTT Data
NTT Data, a key subsidiary of Japan’s NTT Group, holds over a 20% share in Japan’s booming data center industry and ranks as one of the top global players in data-center colocation. Through its Global Data Centers division—operating 150+ facilities across 20+ countries—it offers modular, build-to-suit wholesale colocation options such as secure cabinets, private cages, dedicated vaults and custom-built campuses. Bolstered by NTT’s telecom backbone, the company is investing heavily—pledging roughly ¥1.5?trillion (~US?$12?billion) over five years, including major projects like a 50?MW joint-venture campus near Tokyo and a 30?MW facility in Kansai—with a strong focus on sustainability, aiming for net-zero emissions and 100% renewable energy by 2030.
QTS Data Centers
QTS Data Centers (formerly QTS Realty Trust) is a prominent U.S.-based provider of carrier-neutral data center colocation, hybrid cloud, and managed services, operating over 5?million ft² across 28+ facilities in North America and Europe, including key hubs in Northern Virginia, Atlanta, Chicago, Dallas, New Jersey, and the Netherlands. Serving more than 1,200 customers—from hyperscalers like AWS, Microsoft, Google, to financial services, healthcare, government, and Fortune?1000 enterprises—the company delivers scalable offerings from single cabinets to megawatt-scale wholesale and hyperscale environments, backed by its software-defined Service Delivery Platform™, “remote hands,” and robust security/compliance certifications (SOC?2, HITRUST, PCI-DSS, FISMA, ISO?27001). Acquired by Blackstone in August?2021 for approximately $10?billion, QTS has been recognized for its sustainability leadership—named the most sustainable data-center company in 2019–2020 and committed to 100% renewable energy—and continues to expand strategic colocation campuses like its Piscataway,?NJ facility, adding significant power and space capacity.
KDDI Corporation
KDDI Corporation, a leading Japanese telecom and Global Fortune 500 company, delivers carrier-neutral data center colocation through its Telehouse brand, operating over 45 facilities worldwide including major Japanese sites like Telehouse Otemachi, Osaka, and high-density hyperscale campuses at Tama?3 and Tama?5 that support up to ~42?kVA per rack and offer tailored private suites and built-to-suit mega-spaces. The company ensures 24/7 operations with robust redundancy and deep connectivity into KDDI’s backbone and Internet exchanges such as JPIX . Emphasizing sustainability, KDDI aims for carbon neutrality in its data centers by FY2026, pioneering immersion-cooled containerized modules with PUE as low as 1.05–1.07, reducing energy use by up to ~94% in trials.
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