Data Center Colocation Market worth $222.97 billion by 2031 - Report by MarketsandMarkets™

DELRAY BEACH, Fla., Oct. 12, 2026 /PRNewswire/ -- According to MarketsandMarkets™, the Data Center Colocation Market is projected to grow from USD 124.47 billion in 2026 to USD 222.97 billion by 2031, at a CAGR of 12.4% during 2026–2031.

Browse 290 market data Tables and 60 Figures spread through 300 Pages and in-depth TOC on "Data Center Colocation Market - Global Forecast to 2031"

Data Center Colocation Market Size & Forecast:

• Market Size Available for Years: 2021–2031
• 2025 Market Size: USD 104.27 billion
• 2026 Market Size: USD 124.47 billion
• 2031 Projected Market Size: USD 222.97 billion
• CAGR (2026–2031): 12.4%

Data Center Colocation Market Trends & Insights:

• Growth is driven by increasing cloud adoption, AI and high-performance computing workloads, enterprise migration to hybrid IT environments, and rising demand for scalable and reliable data center capacity.
• By service type, managed colocation is expected to register the highest CAGR of 18.0% during the forecast period.
• By service scale, retail colocation is expected to account for the largest market value of USD 86,390.3 million in 2026.
• By workload type, HPC is expected to register the highest CAGR, driven by AI, machine learning, analytics, and other compute-intensive workloads.
• North America is expected to account for the largest market value of USD 48,453.2 million in 2026.

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This growth is driven by increasing cloud adoption, rising data volumes, enterprise digital transformation, and growing demand for scalable and reliable IT infrastructure. Organizations are increasingly using colocation facilities to access power, cooling, connectivity, and physical infrastructure without making large investments in owned data centers. The adoption of hybrid and multi-cloud environments is also increasing demand for facilities that provide direct connections to cloud providers, networks, and other digital platforms. At the same time, AI and high-performance computing are creating new requirements for high-density infrastructure, advanced cooling, and greater power availability.

General purpose IT will register the largest market share.

General purpose IT, covering standard compute, storage, and networking workloads, is expected to account for the largest market share in the Data Center Colocation Market during the forecast period. Enterprises across industries continue to rely on colocation facilities for mission-critical applications such as enterprise resource planning, customer relationship management, virtualization, databases, and web hosting. These workloads require reliable power, cooling, connectivity, and high availability, making colocation suitable for organizations seeking to maintain IT performance without operating dedicated facilities. Hybrid IT adoption is also supporting demand as businesses connect colocation infrastructure with private and public cloud environments. Although HPC and AI workloads are growing rapidly, general purpose IT continues to represent a broader base of enterprise workloads. Providers can address this segment through flexible rack capacity, reliable infrastructure, scalable power options, and connectivity services that support changing enterprise requirements.

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Hyperscalers are poised for the fastest growth rate during the forecast period.

Hyperscalers are expected to register the fastest growth among end users during the forecast period, supported by continued expansion of cloud services, AI infrastructure, and digital platforms. Hyperscalers require large, scalable data center capacity to support growing computing and storage needs across multiple regions. Colocation lets these companies expand their infrastructure without relying entirely on self-built facilities and provides access to established power, connectivity, and data center ecosystems. The increasing deployment of AI workloads is further increasing their requirements for high-density capacity and suitable cooling infrastructure. Hyperscalers can also use colocation facilities to enter new markets and expand capacity closer to customers and digital ecosystems. Colocation providers can leverage this opportunity by offering large capacity blocks, scalable power and cooling, strong network connectivity, and expansion options that support the changing requirements of hyperscale customers.

North America expected to account for the largest market.

North America is expected to remain the largest regional market for data center colocation during the forecast period, supported by strong demand from enterprises, cloud service providers, hyperscalers, and technology companies. The region has a mature data center ecosystem, extensive network infrastructure, and established cloud and digital service markets. The US accounts for most of the regional activity, with major data center hubs including Northern Virginia, Dallas-Fort Worth, Atlanta, Phoenix, Chicago, and Silicon Valley. Growing AI adoption and cloud requirements are further increasing demand for scalable capacity. At the same time, power availability and development constraints are encouraging providers to evaluate emerging locations beyond traditional data center hubs. Colocation providers can benefit from this demand by securing suitable land and power capacity, expanding interconnected facilities, and offering scalable infrastructure to enterprises and hyperscalers. The region's established digital ecosystem and continued investment in data center infrastructure are expected to support its leading market position.

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Top Companies in Data Center Colocation Market:

The Top Companies in Data Center Colocation Market are Equinix (US), Digital Realty (US), NTT DATA Corporation (Japan), QTS Data Centers (US), KDDI Corporation (Japan), Iron Mountain (US), China Telecom (China), and CyrusOne (US).

Data Center Colocation Market - Investment & funding +Merger & Acquisition

Investment and Funding Context

The Data Center Colocation Market is attracting substantial investment as operators expand capacity to address growing demand from hyperscalers, cloud service providers, enterprises, and AI infrastructure companies. Investment is increasingly directed toward powered land, large-scale campuses, facility expansion, and high-density infrastructure. In March 2026, Digital Realty closed its inaugural US hyperscale data center fund with USD 3.25 billion in equity commitments, focused on developing hyperscale facilities across major US markets. Operators are also using joint ventures and institutional capital to scale capacity while managing capital requirements. The investment environment is supported by long-term customer demand and rising power and capacity requirements, although high construction costs, power constraints, and longer development timelines remain key considerations for investors.

Revenue Shift Context

The Data Center Colocation Market is increasingly shifting toward recurring revenue generated through long-term colocation leases, hyperscale deployments, interconnection, and capacity expansions. Providers are benefiting from strong customer commitments as enterprises and hyperscalers seek reliable third-party infrastructure rather than developing all capacity internally. Digital Realty reported USD 6.11 billion in revenue for 2025, while Equinix reported USD 9.22 billion, reflecting the scale of recurring revenue generated by established colocation platforms. Revenue growth is increasingly linked to larger capacity requirements, interconnection services, and expansion of existing customer deployments. This creates opportunities for providers to increase revenue through long-term contracts, additional capacity, cross-connects, and expansion services across established and emerging data center markets.

Mergers and Acquisitions

Mergers and acquisitions are reshaping the colocation market as operators and infrastructure investors seek additional capacity, geographic coverage, and access to established customer ecosystems. Recent transactions have focused on high-density colocation platforms, hyperscale facilities, and regional operators. M&A activity in the broader data center sector exceeded USD 69 billion across 113 transactions in 2025, according to S&P Global Market Intelligence. The activity continued in 2026, with Equinix and CPP Investments completing the acquisition of Nordic operator atNorth for approximately USD 4.1 billion in September 2026. Digital Realty also expanded its portfolio through transactions involving Teraco and three Northern Virginia data centers.

DATA CENTER COLOCATION MARKET: MERGERS AND ACQUISITIONS, AUGUST 2025–SEPTEMBER 2026

Company Revenue Share Details

The global Data Center Colocation Market has a concentrated group of large infrastructure providers, alongside regional operators and specialized data center companies. Equinix, Digital Realty, NTT DATA, KDDI Corporation, and QTS Data Centers represent major global participants, supported by extensive colocation footprints, interconnection capabilities, hyperscale capacity, and established customer relationships. Equinix reported USD 9.22 billion in 2025 revenue, while Digital Realty reported USD 6.11 billion, although these company-level figures include broader digital infrastructure activities and should not be treated as standalone colocation market revenue. Revenue generation is increasingly supported by recurring leases, large hyperscale deployments, interconnection, and capacity expansions. Competition is also shaped by access to power and land, geographic coverage, customer connectivity, and the ability to develop high-density infrastructure. The growing participation of institutional investors and infrastructure funds further supports capacity expansion through joint ventures, acquisitions, and dedicated data center investment vehicles.

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Data Center Rack Market by Rack Type (Open Frame, Enclosed), Type (Server Racks, Network Racks), Rack Height (42U & Below, 43U up to 52U), Rack Width (19 Inch, 23 Inch), Data Center Type (Enterprise, Colocation, Hyperscale) - Global Forecast to 2030

Hyperscale Data Center Market by Power Capacity (10-50 MW, 50-100 MW, Above 101 MW), IT Infrastructure (Server, Storage, Network), Electrical Infrastructure (PDUs, UPS Systems), Mechanical Infrastructure (Cooling Systems, Rack) - Global Forecast to 2030

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