Global Data Center Colocation Market Size Likely to Grow at a CAGR of 14.5% By 2035

Market Size and Growth

The market size of global data center colocation will be estimated at USD 84.5 billion in 2025 and is expected to grow to between USD 96.7 billion in 2026 and about USD 327.3 billion by 2035, with a current CAGR (compound annual growth rate) of 14.5% during the period of 2026 to 2035.

Data Center Colocation Market Revenue and Trends

Data Center Colocation is a type of service offered by a third party to house a customer’s privately owned and self-administered servers and networking equipment in a third-party data center. Colocation facilities provide necessary infrastructure such as electric power, cooling, security, and high-speed interconnection. Contrary to the cloud, which is a complete outsourcing of the infrastructure, colocation maintains control of the hardware but benefits from the massively scaled and redundant environment offered by a professional provider.

The rising adoption of data centers across all industry types is reflected in the optimistic behavior of the data center colocation market. The market offers flexibility in terms of meeting the capacity demands of certain organizations or institutions owing to the availability of solutions like retail and wholesale colocation. The development of the required infrastructure to preserve, store, and analyze data as swiftly as possible has been driven by the improvements in data by organizations in many sectors.

What are the Factors That Have a Significant Contribution to the Growth of the Data Center Colocation Market?

The colocation market is propelled by the increasing demand for edge computing and low latency as the following applications employ applications that are sensitive to latency yet have been forced to operate using central data centers. Streaming video, online gaming, the Internet of Things, autonomous technology, real-time analytics, or any purpose that requires minimal latency between a computing resource and its user. Colocation providers install the infrastructure closer to the end user by means of edge data centers whose low latency delivers low-latency connectivity and distributed computational resources, thereby reducing latency. Dense utilization of applications that consume substantial bandwidth expects colocation usage rather than a central data center.

Also, supporting policies and digitalization initiatives have played a significant role in boosting the data center colocation market. These policies attracted the private players to make investments that will further drive the digital infrastructure demand. Governments around the world, especially those emphasizing the digital economy, are making efforts to facilitate data center investment for the digital infrastructure to drive the colocation market growth. Digitalization policies among the Indian government are one of the factors running the market, where digitalization is increasing and is now expected to improve three to fourfold as the investments in infrastructure grow.

The country has already reached around 1,280 MW of cloud data center capacity and is expected to grow 4–5 times by 2030, which shows a sign of an increasing digital population and thus the growth of demand for the colocation market. The Middle East is also heading for mass digital infrastructure investments the country’s data center capacity is anticipated to go from 1 GW in 2025 to 3.3 GW within a few years. Also, government-driven programs, data localization, and US$50 billion digital infrastructure investments are stimulating demand for colocation services in the country. In the UAE, government-supported programs and data localization regulations, and over US$50 billion in investments, are fueling the colocation demand. Tax benefits, fast-track approval processes, data localization requirements, and smart city programs are not only attracting international players to invest in them but will also, at the same time, accelerate the open cloud adoption, which will boost up the overall market.

Regional Insights

North America held the highest market share in 2025. The rise of cloud computing, the growth of AI and big data workloads, and the spread of hybrid IT strategies are all important factors in this growth. Additionally, the presence of several hyperscale providers, investments in large-scale data centers, demand for high-performance and low-latency infrastructure, and economies of high connectivity, innovation, and a high level of enterprise IT spending have made North America an extremely large and rapidly growing Region for colocation.

Besides, the Asia Pacific market is expected to grow at the highest CAGR during the forecast period. This growth is driven by higher adoption rates of cloud computing, hyperscale data centers, and the proliferation of AI, big data, and the Internet of Things in China, India, Japan, and Southeast Asia, alongside increasing internet penetration, the release of 5G, and government digital initiatives. Growing need for data localization coupled with a shift to edge computing will continue to bolster colocation adoption in Asia.

Report Scope

Recent Developments

• In September 2024, the US Department of Homeland Security (DHS) granted Equinix, Inc. a contract for colocation services for its Homeland Security Enterprise Network. The tender specifies the provision of “power, connectivity, and related operations and maintenance,” with the services encompassing the “Homeland Security Enterprise Network (HSEN) COLO East and West Enterprise cloud access points.”

List of the prominent players in the Data Center Colocation Market:

• Digital Realty Trust
• Zayo Group LLC
• Colt Technology Services Group Limited
• CoreSite
• CyrusOne
• Centersquare
• China Telecom Corporation Limited
• Equinix Inc.
• Flexential
• Iron Mountain Inc.
• NTT Ltd. (NTT DATA)
• QTS Realty Trust LLC
• Rackspace Technology
• Telehouse (KDDI CORPORATION)
• Cologix
• Others