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What Is The Data Center Colocation Market Size In 2026, And Where Is It Heading By 2030?
The data center colocation market has experienced rapid expansion in recent years. It is projected to grow from $78.01 billion in 2025 to $90.48 billion in 2026, registering a compound annual growth rate (CAGR) of 16.0%. The historical growth of this market can be attributed to factors such as rising data center costs, the need for reliable power and cooling, an increase in internet traffic, the expansion of enterprise IT workloads, and the demand for secure facilities.
The data center colocation market is projected to undergo significant expansion in the coming years. It is forecast to grow to $163.08 billion in 2030 at a compound annual growth rate (CAGR) of 15.9%. This projected increase is fueled by factors including rising cloud adoption, the overflow of hyperscale demand, new sustainability regulations, the ongoing expansion of edge computing, and the critical need for low latency connectivity. Prominent trends anticipated in this period involve enterprises shifting towards colocation, the implementation of high-density rack systems, the design of energy-efficient data centers, the broadening of edge colocation offerings, and the development of facilities focused on interconnection.
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Data Center Colocation Market Growth Drivers And Their Impact On Future Demand
The growing need for cloud adoption is anticipated to propel the expansion of the data center colocation market in the future. Cloud adoption describes the method by which individuals, organizations, or businesses integrate and utilize cloud computing services and resources to improve their IT capabilities and achieve specific goals. Within data center colocation, cloud adoption is employed to provide businesses with a secure, reliable, and highly connected environment, facilitating seamless integration, supporting hybrid deployments, and delivering the scalability and flexibility essential for dynamic business landscapes. As an illustration, in January 2025, according to AAG IT Services, a UK-based non-government organization, in 2022, 57% of SMB workloads and 56% of SMB data were hosted in public clouds, with an additional 6% of each expected to migrate to the cloud within the next 12 months. Consequently, by 2023, approximately 63% of SMB workloads and 62% of SMB data are projected to be cloud-hosted. Therefore, the increasing demand for cloud adoption is driving the growth of the data center colocation market.
What Categories Define The Data Center Colocation Market?
The data center colocation market covered in this report is segmented –
1) By Type: Retail Colocation, Wholesale Colocation
2) By Enterprise Size: Large Enterprise, Small Scale Enterprise
3) By End-User: BFSI, IT And Telecom, Government And Defense, Healthcare, Other End Users
Subsegments:
1) By Retail Colocation: Single Cabinets, Half Cabinets, Full Cabinets, Caged Space, Custom Suites
2) By Wholesale Colocation: Private Data Center Suites, Dedicated Data Center Space, Large-Scale Colocation
What New Developments Are Emerging In The Data Center Colocation Market?
Leading companies active in the data center colocation market are introducing new technologies like Air-Assisted Liquid Cooling (AALC) to enhance their profitability. Air-Assisted Liquid Cooling (AALC) technologies within data center colocation refer to innovative cooling solutions engineered to improve the efficiency of managing heat produced by servers and other electronic components in a data center environment. For instance, in August 2023, Digital Realty, a US-based provider of data center, colocation, and interconnection solutions, launched a novel high-density colocation service as part of its PlatformDIGITAL. This new service addresses data and AI challenges, offering clients an advanced solution to boost AI capabilities and extract value from their data. The high-density colocation services tackle issues related to the rapid growth of unstructured data and the utilization of artificial intelligence (AI). Available in 28 global markets, the service supports workloads of up to 70 kilowatts per rack, leveraging Air-Assisted Liquid Cooling technology. Responding to customer input, Digital Realty provides standardized configurations and ultra-high-power densities for quick deployment of high-performance infrastructure globally.
Major Players Driving Competition In The Data Center Colocation Market
Major companies operating in the data center colocation market are AT&T Inc.; China Telecom Corporation Limited; NTT Ltd.; Element Critical; Global Switch Limited; Equinix Inc.; Iron Mountain Incorporated; Digital Realty Trust Inc.; Rackspace Technology Inc.; Zayo Group Holdings Inc.; CyrusOne Inc.; CoreSite Realty Corporation; Sungard AS; Cyxtera Technologies Inc.; Switch Ltd.; QTS Realty Trust Inc.; EdgeConneX Inc.; Aligned Energy LLC; Netrality Data Centers Inc.; Evoque Data Center Solutions; 365 Data Centers; Stream Data Centers; Compass Datacenters LLC; ServerFarm LLC; Digital Fortress Inc.; RagingWire Data Centers Inc.; DataBank Inc.; Sabey Data Centers LLC; Verizon Communications Inc.
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Data Center Colocation Market Regional Leaders: Insights From The 2026 Report
North America was the largest region in the data center colocation market in 2025. The regions covered in the data center colocation market report are Asia-Pacific, South East Asia, Western Europe, Eastern Europe, North America, South America, Middle East, Africa.
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Wasay has over a decade of experience in market research, data modelling, and analytics, with prior experience at GlobalData and Decision Tree Consulting Services. At The Business Research Company , he leads research operations across syndicated studies, customized consulting engagements, and the Global Market Model platform. His professional experience includes supporting organizations such as Boston Consulting Group, KPMG, and Ernst & Young. Wasay holds a degree in Electronics and Communications Engineering, postgraduate management qualifications from International Management Institute Belgium and Indian School of Business and Entrepreneurship, and completed the Integrated Program in Business Analytics from Indian Institute of Management Indore.
