Data centre colocation market to reach US$279.1bn by 2034

The data centre colocation market in the United States is expected to reach heights of US$279.1bn by 2034, rising rapidly at a CAGR of 14.9%, according to Future Market Insights.

Continuing to evolve, the colocation market expansion is expected to be driven by technological advancements, changing business needs and the growing importance of reliable, scalable and secure data infrastructure.

In addition to the US market, the European data centre market is currently undergoing substantial growth, which is primarily being propelled by the expanding utilisation of the Internet of Things (IoT), cloud computing and artificial intelligence and machine learning (AI/ML).

An enterprise need for reliable IT infrastructure

A colocation facility, also known as a colo, is a data centre where a business can rent space for servers and computing hardware. The colo will provide building, cooling, power, bandwidth and physical security, alongside the customer providing servers and storage.

These facilities are able to implement advanced security protocols, including physical security, network security and compliance with industry standards. As a result, they can ensure data protection and minimise cybersecurity risks driving the growth of data centre colocation across various key industries. 

Between 2019 to 2023, the data centre colocation market was valued at a CAGR of 12.6%. Currently, it is estimated that the market is estimated to be worth US$69.7bn in 2024 and in the next decade is expected to grow at a growth rate of 14.9%.

Now, based on end-users, the large enterprises segment is predicted to account for a share of 63% in 2024. Globally, global data centre colocation demand in China in 2024 is expected to account for a CAGR of 15.4% and 12.7% in the US. Between 2024 and 2034, Germany is projected to expand by a value of 14.4%. 

Likewise in Japan, which is a country already working to expand its colocation services to advance sustainable digital transformations, the market is expected to grow at a CAGR of 16.1% in 2024.

Growing digitalisation leading to tailored colocation solutions

“The growing digitalisation across industries and increased importance of advanced IT infrastructure is anticipated to drive the market growth during the forecast period,” says Sudip Saha, Managing Director and Co-Founder at Future Market Insights.

There is a growing need for scalable and reliable IT infrastructure across various key industries, owing to digital transformation. This is expected to drive the growth of the data centre colocation market during the forecast period.

Growing unique IT infrastructure requirements, due to compliance and security needs in finance and healthcare, are hoping to lead to tailored colocation solutions that cater to these crucial sectors.

In addition, the rising reliance on cloud services is working to fuel the demand for colocation facilities that provide connectivity and support for cloud deployments. Colocation complements cloud strategies by offering hybrid solutions for businesses.

Future Market Insights cites key players in the data centre colocation market who are focusing on organic growth strategies, which included partnerships. This includes CyrusOne, which has expanded across the US by providing colocation solutions to numerous enterprises. The company's emphasis on customised solutions, hyperscale facilities and energy-efficient data centres has influenced market trends.

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