Global Data Center Colocation Market Growth Insights – Market Area to Reach 72.93 Million Sq. Ft. and Power Capacity to Exceed 18,723 MW by 2031, Driven by Rising AI & Machine Learning Workloads, Big Data and IoT Adoption, Rapid Digital Transformation, and Increasing Demand for Scalable Colocation Infrastructure (2026–2031)

Global Data Center Colocation Market Landscape 2026-2031

DATA CENTER COLOCATION MARKET SIZE

The global data center colocation market size by investment was valued at USD 88.91 billion in 2025 and is expected to reach USD 216.37 billion by 2031, growing at a CAGR of 15.98% during the forecast period. The market experienced growth in investments, which grew by around 53.6% in comparison to 2024. The demand for colocation data center facilities across the region is steadily increasing, driven by the rapid adoption of emerging technologies such as Artificial Intelligence (AI), Machine Learning (ML), big data, and the Internet of Things (IoT).

The US data center colocation market is expected to experience significant investment growth over the forecast period, with the South-Eastern US emerging as a major contributor and representing around 28% to the overall market share. The market presents attractive opportunities for investors looking to enter and expand their presence in the sector.

The European data center colocation market is expected to witness substantial investment of over $46.51 billion, with Western Europe accounting for the largest share, followed by the Nordics and Central & Eastern Europe.

The APAC data center colocation market is expected to experience strong investment growth during the forecast period. Southeast Asia is anticipated to make a significant contribution to the regional market, while China continues to dominate in terms of colocation data center development.

In Africa, South Africa is expected to account for the largest data center colocation market share of 43% by investments, supported by mature infrastructure, strong connectivity, and the presence of multiple global cloud regions. Other high-growth markets, such as Nigeria and Kenya, are attracting significant capital due to rising enterprise demand and improving connectivity ecosystems.

The ongoing conflict in the Middle East is increasing costs across data center value chain. A sharp rise in global oil and energy prices, coupled with the depreciation of African currencies and higher freight charges resulting from disruptions in the Red Sea and Strait of Hormuz, is raising the cost of importing servers, power systems, cooling equipment, and other critical infrastructure.

The Nordic region is widely considered one of the most attractive global locations for data center development due to natural free cooling. Locations in Norway, Sweden, Finland, and Iceland are particularly attractive due to access to renewable power sources such as hydropower, wind energy, and geothermal energy.

The data center colocation market in Latin America is projected to attract a cumulative investment of $23.14 billion between 2026 and 2031. This growth is primarily driven by Brazil, Chile, Mexico, and other countries emerging as promising investment destinations.

Global Data Center Market Size & Share, Growth Insights – Investments - $959.19 Billion | Area to Reach 109.61 Million Sq. Ft. and Power Capacity to Exceed 28,307 MW Globally by 2031.

DATA CENTER COLOCATION MARKET TRENDS

AI Transforming the Landscape of the Data Center Market

1. The AI industry is set to significantly increase the size of hyperscale data centers. Even though the current AI investments haven’t fully compensated for the growth in hyperscale data centers, the capacity of these data centers, especially for AI workloads, is expected to almost triple in the next five to six years. With the rising adoption of AI across several industries, new data centers are being designed to support high-density AI-based workloads.
2. Europe is undergoing rapid digital transformation driven by widespread enterprise adoption of AI, cloud, and data-driven technologies, significantly increasing demand for data center infrastructure. Countries such as Germany, the UK, and Italy show near-universal digital connectivity, with Germany reporting 93% of organizations prioritizing AI and digital technologies, the UK reaching 97.8% internet penetration with over 55 million social media users, and Italy achieving 90% internet penetration.
3. Rapid digitalization and AI adoption are driving strong demand for hyperscale and AI-ready data center infrastructure across Latin America. Governments and enterprises are investing heavily in AI, connectivity, and digital transformation initiatives. Examples include Brazil’s $4 billion National AI Plan, Colombia’s $116 million National AI Policy, and Mexico’s plans for Latin America’s first NVIDIA-powered HPC and AI center in Nuevo León with an estimated $1 billion investment. These initiatives are increasing demand for high-density, GPU-ready, and cloud-enabled data center capacity.

Renewable Energy and Sustainability Initiatives by Data Center Operators

1. With the rapid growth in AI and cloud workloads, energy demand is increasing significantly. As a result, sustainability has become essential for managing carbon emissions, operating costs, and ensuring long-term grid stability. Data centers must prioritize sustainability, especially as local governments and residents are increasingly opposing projects that consume excessive energy, strain water resources, and contribute to higher emissions or noise levels.
2. For a more sustainable approach, data center operators in the US are increasingly investing in clean and renewable energy. Several companies are securing long-term power purchase agreements, building on-site solar and wind projects, as well as integrating battery storage systems to reduce carbon emissions and improve energy efficiency.
3. Latin America is strengthening its position as a sustainable data center hub through renewable energy expansion and policy support. Countries such as Argentina, Chile, Colombia, and Mexico have established ambitious clean energy targets, creating favorable conditions for hyperscale deployments. For example, Argentina's proposed OpenAI–Sur Energy Stargate project links AI infrastructure deployment with dedicated renewable energy supply, while Colombia released over 5GW of grid connection capacity in 2025 to accelerate new solar and wind projects that can support future data center demand.
4. The Nordic region is emerging as a global benchmark for sustainable data center development, leveraging abundant renewable energy resources and ambitious national decarbonization targets. Countries such as Sweden, Norway, Denmark, and Finland are increasingly attracting hyperscale investments due to access to low-carbon power. Examples include Equinix’s Stockholm facilities operating on 100% renewable energy, EcoDataCenter’s Falun campus powered entirely by wind and hydropower, and Amazon’s 472 MW wind power agreements in Finland, which increased its contracted renewable energy capacity in the country to 772 MW.
5. The UAE aims to achieve the target of zero carbon emissions by 2050. Dubai has announced its plan to achieve a 50% reduction in carbon emissions by 2030. The Energy Strategy 2050 is the first energy strategy in the UAE that aims to increase the composition of renewable energy from 25% to 50% in the total energy mix by 2050.
6. AI data centers are changing sustainability standards in several ways, including raising acceptable power density limits, expanding metrics beyond Power Usage Effectiveness (PUE), driving the adoption of liquid cooling, tightening expectations for water use, requiring sourcing of carbon-free energy, promoting waste heat reuse, demanding grid-friendly operations, and emphasizing the full lifecycle impact.

DATA CENTER COLOCATION MARKET SEGMENTATION INSIGHTS

1. Data center operators are increasingly deploying high-capacity UPS systems (>750 kVA) with redundant configurations such as N+1, N+N, and 2N to ensure reliable and efficient operations, while smaller facilities and hyperscale environments often use UPS systems below 500 kVA and in-rack solutions. For example, Sify Technologies’ Rabale data center uses an N+N UPS configuration with 10 minutes of backup, and KIO Networks’ MEX 6 facility is equipped with a 900 kVA UPS system.
2. Despite being a major source of carbon emissions, generators remain essential for data centers due to ongoing power reliability and grid stability challenges, driving operators to adopt more efficient and cleaner backup power solutions. For example, Africa Data Centres’ JHB1 facility provides 48 hours of generator-backed power, Equinix’s BG2 data center uses diesel generators with N+1 redundancy, and Gulf Data Hub’s Dubai facility operates a 16,000 kVA N+1 generator system with 24 hours of backup fuel storage.
3. Modern data centers are designed in line with ASHRAE cooling guidelines and Uptime Institute Tier standards, leveraging advanced cooling technologies and redundancy to optimize thermal efficiency and ensure reliable operations. For example, NTT DATA’s Ho Chi Minh City 1 facility uses water-cooled systems, CRAH units, AHUs, and cold aisle containment, while Urbacon’s DC5 data center features N+1 direct evaporative cooling and Moro Hub’s Dubai facility is equipped with cooling towers, N+1 chillers, CRAH units, and hot/cold aisle containment.

GLOBAL DATA CENTER COLOCATION MARKET GEOGRAPHICAL ANALYSIS

1. Investment in the US data centers nearly doubled as compared with 2024, fueled by strong construction activity from both colocation and hyperscale operators. It is estimated that the demand for data centers will continue to grow as Artificial Intelligence (AI) becomes more prevalent. The Southeastern US, including states such as Virginia, Georgia, and North Carolina, continues to lead in data center investments; this is followed by the Southwestern US.
2. Canada is also among the developed and established data center markets in North America. As a key regional hub, the demand for data centers is steadily increasing due to its strategic location (near the US), infrastructure, as well as the government initiatives and support for data center development.
3. The UK and Germany are among the biggest data center colocation markets in Europe, accounting for around 19.81% and 19.04% of the European data center colocation market’s investments, respectively, in 2025; these countries continue to witness data center investments from local as well as global data center operators.
4. In 2025, the APAC data center colocation market by investments grew by around 40.13% as compared with 2024. The market is expanding significantly due to several factors such as the adoption of Artificial Intelligence (AI) and the demand for edge computing. China accounted for a share of around 37% in the APAC data center colocation market investments in 2025, with Southeast Asia contributing approximately 21.22% to the region’s data center colocation market investments during the same period.
5. Brazil holds a significant share of the market in the data center growth of Latin America. The digital transformation policies of the country, coupled with the widespread adoption of IoT and Big Data, support major investments in data center infrastructure.
6. Norway and Finland are among the fastest-growing data center markets in the Nordic region, driven by factors such as the growing adoption of digital platforms, cloud adoption across businesses, and the adoption of advanced technologies, including AI, IoT, and big data.

DATA CENTER COLOCATION MARKET VENDOR LANDSCAPE

1. The global data center colocation market has the presence of key investors such as AirTrunk, Aligned Data Centers, CDC Data Centres, CloudHQ, Compass Datacenters, CyrusOne, DataBank, Digital Realty, EdgeConneX, Equinix, Global Switch, Iron Mountain, NTT DATA, QTS Realty Trust, STACK Infrastructure, ST Telemedia Global Data Centres (STT GDC), Switch, Vantage Data Centers and others.
2. In August 2025, AirTrunk secured new sustainability-linked financing of approximately $10.37 billion from approximately 60 banks for the development of sustainable and green data centers across Australia, Hong Kong, Malaysia, and Singapore.
3. In October 2025, AtlasEdge secured $294.8 million in sustainability-linked funding backed by Banco Santander and ING to develop data centers at its data center campus in Lisbon, Portugal. The seven-year term bond will be used to construct two data centers, LIS001 and LIS002, which will cost $72 million and $219 million, respectively. The company also announced that it had acquired land for a third data center, LIS003.
4. In September 2025, ODATA, part of Aligned Data Centers, secured $1.02 billion in green financing, the largest sustainable funding package ever for data centers in Latin America, to support the development of environmentally focused projects across Brazil, Mexico, Chile, and Colombia.
5. Some of the major colocation data center operators in US include CyrusOne, DataBank, Digital Realty, Equinix, NTT DATA, EdgeConneX, Aligned Data Centers, H5 Data Centers, HostDime, Hut 8, Iron Mountain, QTS Realty Trust, Sabey Data Centers, Skybox Datacenters, STACK Infrastructure, Stream Data Centers, Switch, T5 Data Centers, TierPoint, and Vantage Data Centers.
6. Some of the major colocation data center companies, operating in the European market include, Ark Data Centres, AtlasEdge, atNorth, Borealis Data Center, Bulk Infrastructure, CloudHQ, Colt Data Centre Services, CyrusOne, DataPro, Data4, Digital Realty, EdgeConneX, Equinix, Global Switch, Global Technical Realty, Goodman, Green Mountain, Iron Mountain, Ixcellerate, Keppel Data Centres, LCL Data Centers, maincubes SECURE DATACENTERS, Nation Data Center, nLighten, NTT DATA, Pure Data Centres Group, QTS Realty Trust, Rostelecom, STACK Infrastructure, Telehouse, Thésée DataCenter, Vantage Data Centers, VIRTUS Data Centres, Yondr Group, and others.
7. Some of the major colocation data center operators in the APAC data data center colocation market include ST Telemedia Global Data Centres, NTT DATA, Princeton Digital Group, EdgeConneX, Colt Data Centre Services, GDS Holdings, Equinix, Digital Realty, CtrlS Datacenters, China Unicom, Global Switch, CapitaLand, China Mobile International, Chayora, BDx Data Centers, AdaniConneX, Iron Mountain, KT Corp, and others.
8. The Latin America market has the presence of several global and regional colocation operators that are investing in the market. Some of them include Equinix, Ascenty, ODATA (Aligned Data Centers), Scala Data Centers, EdgeConneX, HostDime, Tecto Data Centers, Elea Data Centers, Cirion Technologies, Claro, Gtd Group, NextStream, and several others.