Enterprise infrastructure outsourcing, hyperscale capacity expansion, and rising demand for AI-ready facilities are accelerating growth in the global Data Center Colocation Market.

The global Data Center Colocation Market was valued at USD 129.69 billion in 2025 and is estimated to reach USD 153.34 billion in 2026, according to Next Move Strategy Consulting (NMSC). The market is projected to reach USD 396.69 billion by 2035, expanding at a compound annual growth rate (CAGR) of 11.14% from 2026 to 2035. Growing enterprise adoption of third-party infrastructure, increasing cloud workloads, and the deployment of artificial intelligence (AI) applications are strengthening demand for scalable data center capacity. North America dominated the market in 2025, accounting for approximately 38.9% of global revenue, supported by established colocation infrastructure, hyperscale cloud providers, and extensive network interconnection ecosystems.

Retail Colocation represented the largest colocation format in 2025, with revenue of USD 66.28 billion, while Wholesale Colocation is projected to register the fastest growth among the two formats at a 12.80% CAGR from 2026 to 2035. Across other segments, demand for large-scale infrastructure is strengthening growth in the 20 MW and Above contracted power capacity segment, which is projected to expand at a 14.86% CAGR. Latin America is expected to register the fastest regional growth at a 13.54% CAGR, while India is projected to lead country-level growth in Asia-Pacific at a 15.83% CAGR.

Key Findings

• The Data Center Colocation Market is projected to expand from USD 153.34 billion in 2026 to USD 396.69 billion by 2035, representing an 11.14% CAGR and an absolute revenue increase of USD 243.35 billion over the forecast period.

• North America dominated the market with approximately 38.9% revenue share in 2025, supported by a mature colocation ecosystem, hyperscale infrastructure investments, and extensive carrier-neutral interconnection capabilities.

• Multi-tenant facilities dominated the tenancy landscape, expanding from USD 82.97 billion in 2025 to USD 282.29 billion by 2035, and are projected to register a 12.32% CAGR.

• Telecommunications was the largest end-user segment, with revenue increasing from USD 19.66 billion in 2025 to USD 58.13 billion by 2035. Manufacturing is projected to record the fastest end-user growth at a 12.95% CAGR.

• Latin America is projected to be the fastest-growing regional market, with a 13.54% CAGR, while India is expected to record the highest country-level growth in the Asia-Pacific region at a 15.83% CAGR.

What Is Driving Growth in the Data Center Colocation Market?

The growing shift from enterprise-owned data centers to third-party infrastructure is a primary driver of market expansion. Organizations across financial services, telecommunications, manufacturing, healthcare, and other sectors are increasingly outsourcing data center operations to reduce capital commitments associated with facility construction, power infrastructure, cooling systems, and ongoing maintenance. Colocation facilities provide access to resilient infrastructure, carrier-neutral connectivity, and scalable computing environments without requiring enterprises to independently develop and operate dedicated data centers. As cloud adoption and enterprise data processing requirements expand, outsourcing enables businesses to scale infrastructure more efficiently while maintaining access to essential network and computing resources. NMSC’s analysis indicates that this transition is strengthening recurring demand for both retail and wholesale colocation services.

Artificial intelligence (AI) and generative AI applications are further accelerating demand for specialized colocation infrastructure. AI training, inference, and high-performance computing workloads require substantial power capacity, advanced thermal management, and reliable infrastructure designed to accommodate high-density server configurations. These requirements are encouraging hyperscale cloud providers and enterprise AI operators to secure wholesale colocation capacity, particularly in facilities with large committed power allocations and integrated cooling capabilities. NMSC’s assessment indicates that these infrastructure requirements are supporting the 20 MW and Above contracted power capacity segment, projected to grow at a 14.86% CAGR, while strengthening the position of Wholesale Colocation as the fastest-growing colocation format. As operators seek to deploy AI capacity within commercially viable timelines, established providers with available power, scalable facilities, and suitable connectivity are gaining strategic importance.

What Is Restraining Data Center Colocation Market Expansion?

High construction costs, grid power constraints, and lengthy utility interconnection processes remain significant barriers to market expansion. Established data center hubs, including Northern Virginia, Amsterdam, Dublin, and Singapore, face increasing pressure on electricity infrastructure as operators plan large-scale campus developments. Securing sufficient power and completing grid connections can delay project delivery, increase upfront investment requirements, and affect the time needed to achieve commercial operation. Rising expenditure on electrical systems, cooling infrastructure, backup power, and specialist construction further influences project economics, particularly for facilities designed to support AI-intensive workloads. These challenges are encouraging developers and investors to assess alternative locations across emerging markets, including parts of Latin America, Southeast Asia, and the Gulf Cooperation Council, where land availability and power access vary by location.

Where Are New Opportunities Emerging in the Data Center Colocation Market?

Wholesale capacity expansion for AI infrastructure represents a significant opportunity for colocation operators, infrastructure investors, and technology vendors. Hyperscale cloud providers and enterprise AI companies require dedicated data halls, high-capacity power connections, advanced cooling systems, and scalable infrastructure to accommodate increasingly demanding workloads. Operators that secure grid connections and develop AI-ready wholesale facilities in secondary North American markets and high-growth Asia-Pacific locations are positioned to compete for long-term infrastructure contracts. This opportunity directly supports the Wholesale Colocation format and the 20 MW and Above contracted power capacity segment.

Segmentation Analysis

Data Center Colocation Market by Colocation Format, 2025–2035 (USD Billion)

Retail Colocation led the market in 2025, with revenue of USD 66.28 billion, supported by demand from enterprises requiring rack space, dedicated cabinets, private suites, network access, and flexible infrastructure scaling. The format serves organizations that need access to professional data center facilities without committing to entire data halls or developing captive infrastructure. Wholesale Colocation, by comparison, is projected to grow at a faster rate of 12.80% from 2026 to 2035, with revenue increasing from USD 63.42 billion in 2025 to USD 225.33 billion by 2035. This expansion reflects growing demand from hyperscale cloud providers and AI infrastructure operators for dedicated data halls, larger power commitments, and customized facility environments.

Analyst Commentary

“NMSC’s assessment indicates that the Data Center Colocation Market is increasingly shaped by AI infrastructure demand, power availability, and the need for scalable capacity. Operators investing in AI-ready facilities, advanced cooling, and reliable connectivity are positioned to capitalize on growing enterprise and hyperscale requirements.”

Key Players Shaping the Data Center Colocation Market

The competitive landscape includes global colocation operators, hyperscale infrastructure developers, telecommunications companies, and specialized digital infrastructure providers. Competition is influenced by available IT capacity, power access, facility reliability, geographic reach, network interconnection, cooling capabilities, and the ability to accommodate increasingly demanding enterprise and AI workloads. Key participants include Equinix, Inc., Digital Realty Trust, Inc., NTT Data Group Corporation, Vantage Data Centers, LLC, and other regional and global operators. The market assessment profiles 20 companies across 38 countries, with market-share analysis available for the top 10 companies.

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Latest Developments in the Data Center Colocation Market

• In September 2026, Digital Realty partnered with Rönesans Infrastructure to develop and operate data centers across Türkiye. The first project is an Ankara campus designed to deliver more than 22 MW of carrier-neutral IT capacity, with land, power, and permitting secured and completion scheduled for 2028.

• In August 2026, Vantage Data Centers and Nebius agreed to deploy high-density, NVIDIA-powered AI infrastructure at Vantage’s CWL1 campus in Newport, Wales. Nebius will lease capacity to support AI training, inference, agentic AI, and enterprise AI workloads.

• In April 2026, NTT DATA opened its Keihanna OSK11 Data Center in Kyoto, Japan, adding 30 MW of IT capacity. Operated by NTT Global Data Centers, the facility provides carrier-neutral connectivity, dual power substations, and N+1 cooling.

• In April 2026, Equinix opened MB3, its fourth International Business Exchange (IBX) data center in Mumbai, following an initial investment exceeding USD 95 million. The facility expands the company’s capacity to serve enterprise, cloud, and AI infrastructure requirements in India.

These developments demonstrate continued investment in colocation infrastructure, hyperscale capacity, AI-ready facilities, and geographic expansion. The emphasis on dedicated power, advanced cooling, and network connectivity also reflects the changing requirements of enterprise and hyperscale customers.

Report Scope

• Market coverage: Global Data Center Colocation Market, including market sizing, forecasts, growth drivers, restraints, opportunities, competitive dynamics, and industry developments.

• Segmentation: By Colocation Format, Delivery Model, Service Offering, Data Center Tier, Contracted Power Capacity, Tenancy Model, and End User.

• Geographic coverage: 38 countries across the global colocation ecosystem.

• Companies profiled: 20 market participants, including leading global and regional colocation providers.

• Market-share analysis: Available for the top 10 companies.

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