The global data center colocation market is projected to expand significantly, increasing from US$ 50,579.1 million in 2021 to US$ 136,647.9 million by 2028. This growth represents a compound annual growth rate (CAGR) of 15.3% over the period from 2021 to 2028.
Several factors are propelling the growth of the global data center colocation market. Enterprises are increasingly seeking cost-effective solutions to minimize their overall IT expenditures. Additionally, the rising need for disaster recovery and business continuity solutions is further driving demand in this sector. However, the market faces challenges, particularly due to the high initial investment and ongoing maintenance costs associated with colocation services, which may limit growth in certain applications. Despite these challenges, advancements in edge computing and the growing demand for sophisticated data center infrastructure, spurred by the rollout of 5G technology, are expected to significantly boost the colocation market.
The ecosystem of the data center colocation market includes several key stakeholders. These consist of land providers, real estate firms, colocation facility operators, managed service providers, security service providers, cloud service providers, and end users. Land and real estate entities supply the foundational infrastructure necessary for constructing data centers. Colocation service providers deliver essential services such as rack space, cross-connects, facility management, power and cooling solutions, helpdesk support, and other critical facilities. Security service providers are integral to maintaining the safety and integrity of data centers. Major cloud providers, including Google, Microsoft, and Amazon, offer public cloud applications that rely on these colocation services. End users encompass a diverse range of industries that utilize colocation services to meet their operational needs.
Impact of the COVID-19 Pandemic on the Data Center Colocation Market
The COVID-19 pandemic has positively influenced the growth of the data center colocation market. As businesses faced increased internet traffic demands, colocation technologies became essential in helping them adapt. Reports from various internet and data service providers indicate that global internet traffic is surging at rates between 30% and 45% annually. This surge has heightened the necessity for data center colocation service providers to ensure they possess the capacity and capability to deliver high-performance services during peak traffic periods. Consequently, many service providers are making substantial investments in their colocation facilities to meet these demands.
Moreover, the pandemic has created an opportunity for the colocation market, as these services enable organizations to achieve their business objectives while operating remotely, all while ensuring robust data security. However, the pandemic also led to some disruptions, particularly due to the temporary shutdowns of manufacturing facilities that produce data center and maintenance equipment, which caused delays in the colocation process during lockdowns.
The overall size of the data center colocation market has been determined through a combination of primary and secondary research methodologies. The research process began with extensive secondary research, utilizing both internal and external sources to gather qualitative and quantitative data relevant to the market. This approach not only provided a comprehensive overview and forecast of the data center colocation market across various segments but also allowed for a detailed analysis based on five major regions: North America, Europe, Asia Pacific, Middle East & Africa, and South America.
In addition to secondary research, primary interviews were conducted with industry participants and experts to validate the data and gain deeper analytical insights. Participants included industry professionals such as vice presidents, business development managers, market intelligence managers, and national sales managers, as well as external consultants like valuation experts, research analysts, and key opinion leaders specializing in the data center colocation sector.
Some of the prominent players in the data center colocation market include Equinix Inc., IBM Corporation, AT&T Inc., Cyxtera Technologies, Inc., Digital Realty Trust LP, CoreSite Realty Corporation, CyrusOne, Inc., QTS Realty Trust, Inc., 365 Data Centers, and UnitedLayer.