Data Center Colocation Market Growth & Trends

The global data center colocation market size is expected to reach USD 117.82 billion by 2028, recording a CAGR of 13.3% from 2021 to 2028, according to a study conducted by Grand View Research, Inc. Several businesses and cloud service providers are shifting toward colocation or multi-tenant data centers, which is a key factor contributing to the market growth. Colocation is the preferred choice among numerous enterprises as it offers increased cost benefits compared to building and maintaining their own data center facility. Colocation data centers also offer operational flexibility while scaling up infrastructure to accommodate larger data volumes. With the rising costs of land, property, and IT infrastructure, these data centers are a viable option for SMEs due to limited IT spending.

The proliferation of online shopping worldwide is anticipated to upkeep the market growth over the next seven years. An increase in the number of online shoppers translates to the generation of increased data volumes in the retail sector. This has led to increased investments in the IT infrastructure sector, especially in data centers. Several retailers are opting for colocation centers to save IT costs, which is further expected to drive market growth.

Countries, such as India, China, and the U.S., have strict data localization laws to prevent cross-border data transfers. The European Union implemented General Data Protection Regulation (GDPR) in 2018, which laid down the norms related to personal data transfer and usage. Such protection laws have propelled several enterprises to locate their data centers within the country borders and localize data storage. Colocation data centers have presented businesses with an opportunity of leasing the infrastructure at affordable rates in proximity to the user, while also scaling the infrastructure to accommodate data volumes. These factors are expected to increase the deployment of colocation facilities, thereby driving the market growth.

Data Center Colocation Market Report Highlights

  • The wholesale type segment is projected to record the fastest CAGR of over 16% from 2021 to 2028 on account of the top global companies, such as Microsoft Corp. and Oracle Corp., renting wholesale colocation centers for their servers
  • The product demand in the small- & medium-scale business segment captured a sizeable share of over 37% in 2020. The segment is anticipated to witness an uptick in demand registering a strong CAGR from 2021 to 2028
  • Asia Pacific is expected to register the highest growth rate over the forecast period on account of the rising data volumes across the region
  • A large percentage of the population uses smartphones, thus increasing the viewership of Over-The-Top (OTT) platforms and streaming services. This is expected to generate large data volumes, thereby increasing the demand for high data storage and faster processing speeds
  • The healthcare end-use segment is estimated to register the fastest CAGR from 2021 to 2028 due to the rising need to effectively store and manage patient data and increased focus on medical services amid the pandemic