Data Center Colocation Market Size

Data Center Colocation Market Size 

Data Center Colocation Market size was valued at USD 69.3 billion in 2022 and is projected to grow at a CAGR of over 11.5% between 2023 and 2032. The growing demand for hybrid cloud and virtualization technologies is a pivotal factor in the industry.

To get key market trends

  Download Free Sample

Businesses are increasingly adopting hybrid cloud models, blending on-premises & cloud-based resources, and utilizing virtualization to optimize server utilization. Colocation providers offer the ideal environment for housing hybrid cloud infrastructure due to their robust facilities, high-speed connectivity, and security measures. This trend reflects the need for flexible, scalable, and reliable data center solutions that support hybrid cloud deployments, further propelling the demand for colocation services in the market. For instance, in May 2023, IBM launched the IBM Hybrid Cloud Mesh, which facilitates seamless connectivity and communication across various cloud environments. Colocation facilities leverage this technology to provide their clients with direct, low-latency connections to multiple cloud platforms, enhancing the versatility and agility of their services.

The rising adoption of green data center facilities is fueling data center colocation market expansion. With increasing environmental concerns, businesses are seeking sustainable and energy-efficient solutions. Colocation providers are responding by implementing green practices such as using renewable energy sources, optimizing cooling systems, and reducing carbon footprints. Clients are drawn to colocation facilities that support their sustainability goals while enjoying cost savings from reduced energy consumption. The demand for eco-friendly data management solutions will continue to surge, and colocation providers are well-positioned to meet this need, driving market expansion. For instance, in July 2023, Huawei launched three new sustainable data center solutions at the 2023 Global Smart Green Data Center Summit. The solutions include an indirect evaporative cooling solution, a distributed cooling architecture, and an intelligent management solution.

Location restraints are a major concern in the data center colocation market. These restraints are often related to factors such as space availability, proximity to clients, power infrastructure, and geographic risks such as natural disasters. To address this challenge, providers can explore innovative solutions, such as modular data center & edge data centers, that can be deployed in constrained locations. Additionally, partnerships with existing data centers or the development of data center clusters can optimize resource utilization. Careful site selection and infrastructure investments can help mitigate location restraints and effectively expand colocation offerings.