Data Center Colocation Market to Grow at a CAGR of 15.6% from 2025 to 2032 | SkyQuest Technology Consulting

WESTFORD, Mass., Aug. 28, 2025 /PRNewswire/ -- The rapid rise of AI workloads is driving demand for colocation facilities designed with high-density power, advanced cooling, and GPU-ready infrastructure.

SkyQuest Technology Consulting published a report, titled, Data Center Colocation Market - Global Opportunity Analysis and Industry Forecast, 2025-2032", valued at USD 80.46 Billion in 2024. With a projected CAGR of 15.6% from 2025 to 2032, the market is expected to reach USD 256.58 Billion by the end of 2032. The global data center colocation industry is evolving rapidly, driven by digital transformation and the proliferation of hybrid IT environments. 

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Data Center Colocation Market Dynamics:

The global data center colocation market is experiencing strong growth, primarily fueled by accelerated digital transformation and increasing demand for scalable IT infrastructure. Businesses are shifting from costly on-premise data centers to colocation facilities that offer flexibility, reliability, and lower capital investment. The surge in IoT devices, AI workloads, and cloud-based services is driving demand for high-density colocation with low latency.

Key trends shaping the market include the rise of edge computing, hybrid cloud models, and sustainable infrastructure, with many providers adopting renewable energy, smart cooling technologies, and carbon-neutral initiatives to align with ESG goals.

Recent Developments in Data Center Colocation Market

• In June 2025, NTT Data Corporation, a renowned Japanese information technology company announced its plans of investing USD 90 million to establish a new colocation-focused data center in Thailand. The effort is aimed at capitalizing on the growing demand for cloud services in the Southeast Asia region.
• In May 2025, Sify Technologies, a leading ICT services provider in India launched pay-per-use colocation pricing at their NVIDIA-certified AI data centre campuses. This new service is aimed at helping companies set up new infrastructure where companies are billed for their colocation charges as per GPU usage.
• In March 2025, Nebius, a renowned provider of AI infrastructure and technology, announced its plans to launch Icelandic colocation deployment in Q2 2025 along with a new data center in New Jersey, United States. The Icelandic deployment was estimated to be powered by geothermal energy to reduce environmental impact.

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Major Challenges in Data Center Colocation Market Industry

One major issue of the market is the growing power density requirement, especially to support AI, high-performance computing (HPC), and GPU-based workloads. This creates pressure on traditional cooling systems and power infrastructure. Additionally, grid limitations in key colocation hubs such as Singapore, Northern Virginia, and parts of Europe have caused delays in new facility construction.

Competitive Landscape:

The market is dominated by leading players such as Equinix, Digital Realty, NTT, CyrusOne, QTS Realty Trust, and Zayo. In 2024, companies are adopting diversified strategies to gain competitive advantage. This includes blending wholesale and retail colocation models, introducing pay-as-you-go pricing, and expanding modular and edge data center deployments in smart cities. Sustainability remains central, with providers integrating renewable energy sources, water-efficient cooling, and energy usage optimization into operations. Furthermore, strategic partnerships are being formed to offer integrated solutions, including AI-ready infrastructure, private 5G, and IoT support for edge workloads.

The major players in the data center colocation industry include,

• Equinix, Inc.
• Digital Realty Trust, Inc.
• NTT Communications Corporation
• CyrusOne Inc.
• QTS Realty Trust (a Blackstone portfolio company)
•  China Telecom Corporation Limited
• KDDI Corporation (Telehouse)
• Iron Mountain Incorporated
• Global Switch
• CoreSite (an American Tower company)
• TierPoint LLC
• Telehouse

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Data Center Colocation Market Segmentation:

The global data center colocation market is segmented into colocation type, enterprise size, end use, and region. Based on colocation type, the market is segmented into retail colocation and wholesale colocation. Based on enterprise size, the market is segmented into large enterprises and SMEs. Based on end use, the market is segmented into retail, BFSI, IT & telecom, healthcare, media & entertainment, and others.

• By colocation type, retail colocation segment dominates due to flexibility, low-turning costs and suitability for distribution of small to moderate size and the need for scalable infrastructure dominates.
• By enterprise size, the large enterprises dominate the market as they require a strong, safe and high-capacity infrastructure to support complex IT work, multi-cloud strategies and global activities.
• By end use, IT and Telecom is the dominant segment, driven by the exponential growth of data, cloud computing and the need for low-latency infrastructure to support real-time applications.
  
  

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Regional Insights

North America dominates the global data center colocation market because of its mature digital infrastructure, the presence of hyperscale cloud suppliers and uses advanced technologies such as AI, Big Data and Edge Computing. The region benefits from strong demand in areas such as finance, health services, authorities and media, including large collection hubs including Nord -Virginia, Silicon Valley and Dallas. 

Why is Data Center Colocation Popular in the United States?

The presence of a high number of data centers coupled with growing investments in new data center construction, are helping the United States lead global demand for data center colocation. Enterprises in the country are focusing on reducing their capital expenditures whilst ensuring access to data centers with advanced cooling, power redundancy, and strong connectivity. Rising energy costs and sustainability goals also make shared facilities attractive, as providers invest in renewable energy and efficient operations. Together, these factors position colocation as an indispensable strategic solution for enterprises and service providers operating in the United States going forward.
 
The Asia-Pacific region looks at the fastest growth in the market, expanding a rapid urbanization, increasing disposable income and digital ecosystems in countries such as China, India, Japan and South Korea. 
 
Europe has an important market share, supported by strict data security rules such as GDPR, strong demand for green and sustainable collection solutions, and increases digital changes in public and private sectors.
 
Latin America, Middle East and Africa (LAMEA) represent an emerging and promising market. Increase in growth is driven by internet penetration, rising business expenses and expansion of clouds and e-commerce platforms in countries such as Brazil, South Africa and UAE. However, the market is still facing challenges such as the development of uneven infrastructure, regulatory fragmentation and limited access to reliable power in some areas.

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About SkyQuest Technology Consulting

SkyQuest Technology Consulting is a leading Strategy Consulting and Market Research firm, provides syndicated as well as customized research reports and growth consulting services, trusted by CXOs from Fortune 500 Companies, Start-ups, and MSMEs. The company comprises a team of expert research analysts and consultants, adding more than 1200 market research reports in our database each year. These reports offer in-depth analysis on 40+ industries & sub industries across 25 major countries worldwide, serving global clients across diverse industries. The company specializes in delivering customized intelligence, data-driven insights, and strategic advisory services that enable businesses to stay competitive and make informed decisions in rapidly evolving industries.

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