The global data center colocation market is projected to grow from USD 30.42 Billion in 2022 to USD 46.3 Billion by 2028, driven by increasing demand from cloud and technology companies and a push towards sustainability.
The global landscape for data center colocation is experiencing a notable surge, with the market poised to achieve a compound annual growth rate (CAGR) of 7.25% over the period from 2022 to 2028. This growth trajectory will see the market value elevate from USD 30.42 Billion in 2022 to an impressive USD 46.3 Billion by the year 2028. This expansion is significantly driven by the increasing demand from cloud and technology companies for data center capacity.
As the digital era progresses, the push towards digitalization by both governmental and private sector organizations, coupled with the enactment of data localization laws, has been instrumental in propelling the demand for colocation services across various industry verticals. This demand is notably concentrated in key data center hubs such as North Virginia, Texas, California, Beijing, Shanghai, London, Frankfurt, Brazil, Paris, and Mumbai. These hubs are seeing considerable investments pouring in, affirming their pivotal roles in the global digital infrastructure.
However, the sector faces challenges, with power availability and supply chain constraints emerging as significant hurdles. These challenges have led to an extension in construction timelines, stretching from the average 18 months to about 30 months. Furthermore, construction costs in prime locations have surged by approximately 20%-30%, influencing a rise in colocation rental pricing.
Amid these challenges, sustainability initiatives have taken center stage, with major data center operators transitioning towards the use of renewable energy sources. Entities like Equinix and Vantage Data Centers are leveraging green bonds, tax credits, and partnerships to minimize their environmental impact. Additionally, the adoption of innovative design solutions, such as liquid and precision air cooling systems, is helping to manage the increasing rack power densities, catering efficiently to AI/ML workloads.
The report also highlights the significance of government regulations and initiatives in shaping the practices within the data center industry, pointing towards a concerted move towards carbon neutrality and sustainability. This move is underpinned by a growing awareness and adoption of renewable energy sources and technologies aimed at reducing carbon emissions.
Geographically, the market is dominated by the U.S. and China, with these countries leading in terms of colocation revenue and investments. The report predicts continuous growth in power capacity alongside an increase in data center projects within these regions. Moreover, Latin America, particularly Brazil, is emerging as a vibrant hub for green data center development, indicating a broad geographical spread in the expansion of the colocation market.
Through a segmentation analysis by infrastructure, the report provides detailed insights into the electrical and mechanical infrastructure, along with general construction considerations critical to the development of data centers. This analysis sheds light on the complexities and the technological advancements shaping the sector.
In conclusion, the report encapsulates a robust and growing global data center colocation market, characterized by a push towards sustainability, adoption of advanced technologies, and substantial geographical expansions. As the digital infrastructure continues to evolve, it is evident that data centers will remain instrumental in supporting the global economy’s digital transformation journey, albeit with an ever-increasing focus on efficiency and sustainability.