Data Center Colocation Market is Projected To Reach US$182.58 Billion By 2031 at CAGR of 13.7% | The Insight Partners

NEW YORK, Sept. 22, 2025 /PRNewswire/ -- According to a new comprehensive report from The Insight Partners, the global data center colocation market is observing significant growth owing to regulatory compliance and data sovereignty.

The report runs an in-depth analysis of market trends, key players, and future opportunities. In general, the data center colocation market comprises a vast array of type, enterprise size, industry vertical, and geography, which are expected to register strength during the coming years.

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Overview of Report Findings

1. Market Growth: The data center colocation market was valued at US$74.13 billion in 2024 and is projected to reach US$182.58 billion by 2031; it is expected to register a CAGR of 13.7% during 2025–2031.
2. Market Dynamics and Insights: As digital transformation initiatives—driven by cloud-native application deployments, video conferencing, content streaming, and IoT/edge environments—mature, enterprises increasingly require robust, high‑density data center infrastructure. Cisco's Annual Internet Report (2023) highlights 3.6 connected devices per capita globally, with billions of connections supporting remote work, AI workloads, and multi-cloud operations. This rapid data traffic growth overloads internal enterprise data centers and legacy operations.
   Colocation providers offer scalable architectures with advanced cooling, carrier-neutral connectivity, and high‑capacity interconnection options—critical for handling high bandwidth volumes and minimizing latency. Colocation facilities are designed as modular, interconnected hubs that can adapt to the increasing demands of digital workloads. They provide modern enterprises with the essential infrastructure required for digital transformation: high bandwidth, resilience, and scalability, all without the financial burden of owning and managing data center assets.
   Colocation providers are integrating solar, wind, and hydroelectric power into their energy mix, optimizing Power Usage Effectiveness (PUE), and deploying advanced cooling technologies such as liquid cooling and AI-based thermal management. Sustainability is not only an environmental concern but also a business differentiator. Enterprises now prioritize colocation partners who can demonstrate ESG compliance, support carbon accounting, and offer green certifications such as LEED, ISO 50001, and Energy Star, which are increasingly prioritized by enterprises seeking ESG-compliant partners. Frameworks such as the Climate Neutral Data Centre Pact require operators to publish energy efficiency and carbon metrics, pushing the industry toward measurable and accountable sustainability.
3. Regional Insights: The North America data center colocation market is segmented into the US, Canada, and Mexico. North America remains the world's largest data center colocation market, with the US responsible for nearly half of global data center electricity use. In 2024, US data centers consumed roughly 180 TWh, representing more than 4% of total US electricity, and this figure is projected to rise to about 260 TWh by 2026, i.e., ~6% of national demand. This explosive growth is largely propelled by AI workloads, cloud services, and edge applications that demand high-density and low-latency infrastructure.
   Several structural factors are driving expansion. One key factor is the availability of abundant and competitively priced electricity, especially in power-rich zones such as Northern Virginia, which hosts thousands of colocation facilities.
   Additionally, rising energy costs and municipal pressure are forcing providers to adopt renewable sourcing and improve efficiency. In Eastern U.S. grids (e.g., PJM), surging demand has contributed to significant capacity auction price hikes and regulatory mandates for data centers to contribute to grid upgrade costs. Moreover, consumer and corporate ESG imperatives are increasing the demand for green-certified colocation. Many providers now offer audit‑grade power metrics, carbon-neutral sourcing, and certifications such as LEED and ISO 50001.
   Grid capacity planning is increasingly becoming a strategic issue. Utilities and regulators are tightening rules around data center connections to ensure sustainable load growth while maintaining access to electricity for local communities.
4. Geographical Insights: North America is expected to dominate the data center colocation market with the highest market share in 2024.

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Market Segmentation

• Based on type, the data center colocation market is segmented into retail colocation, wholesale colocation, and hybrid cloud-based colocation.
• In terms of enterprise size, the data center colocation market is divided into large enterprises and SMEs.
• On the basis of industry, the data center colocation market is segmented into IT and telecom, BFSI, healthcare, retail, and others.
• The data center colocation market is segmented into five major regions: North America, Europe, Asia Pacific, the Middle East and Africa, and South and Central America.

Competitive Strategy and Development

• Key Players: A few major companies operating in the data center colocation market include CoreSite Realty Corporation, CyrusOne Inc, Iron Mountain Inc, Digital Realty Trust Inc, Equinix Inc, Telehouse, NTT Data Corp, International Business Machines Corp, Rittal GmbH & Co KG, and AT&T, among others.
• Trending Topics: Data Center, Modular Data Center, Micro Data Center, and Edge Data Center, among others.

Global Headlines on the Data Center Colocation Market

• 'CoreSite, an American Tower company (NYSE: AMT) empowering critical business and AI workloads that impact everyday life through interconnected data center solutions, released its 2025 State of the Data Center Report, which examines the latest data center and cloud computing trends, strategies and requirements. Now in its sixth year, the 2025 report finds business and IT leaders are navigating a world where they must increasingly rely on digitization – particularly emerging technologies like AI – to innovate, generate revenue and modernize their organizations, all while managing costs in an uncertain economic environment.'
• 'Houston-based Calpine Corporation announces a new 190-megawatt (MW) agreement with Dallas-based CyrusOne, a leading global data center developer and operator, to serve a new data center adjacent to the Thad Hill Energy Center in Bosque County, Texas. The deal secures power, grid connection, and land to support a new state-of-the-art facility that is currently under construction and expected to be operational by the fourth quarter of 2026.'

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Conclusion

The data center colocation market is experiencing rapid growth, fueled by rising demand for scalable IT infrastructure, increasing global data traffic, and accelerating digital transformation. Additionally, growing industry investment in data centers is fueling market expansion. Technological advancements, increased adoption of hybrid and multi-cloud environments, and heightened focus on regulatory compliance and data sovereignty are expected to create lucrative market opportunities. Moreover, growing emphasis on sustainability, green energy, and rising demand for AI-driven infrastructure are expected to drive future growth.

The report from The Insight Partners, therefore, provides several stakeholders—including digital forensics solution providers, law enforcement & government agencies, cybersecurity firms, regulatory & standards organizations, and end-users—with valuable insights into how to successfully navigate this evolving market landscape and unlock new opportunities.

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