Global Data Center Colocation Market Size & Share Analysis, Growth Trends, Forecast 2031

Wholesale colocation represents an important segment of the data center colocation market, primarily serving large enterprises, hyperscale cloud providers, and technology companies with high-capacity infrastructure requirements. Wholesale colocation services are offered in two ways: colocation of an entire data center space and colocation of data halls within a single data center, typically with a minimum capacity of 250 kW. Wholesale colocation also includes hyperscale colocation arrangements, which can involve multi-megawatt capacity requirements for large cloud and technology companies.

These services generally involve longer-term agreements, with wholesale colocation transactions extending for up to 15 years, compared with retail colocation leases, which can have a minimum term of around three years. The combination of larger capacity requirements and longer lease commitments can contribute to lower costs per unit of capacity compared with retail colocation services, making wholesale colocation suitable for customers with large-scale and long-term infrastructure needs.

General construction accounted for the largest share of the global data center colocation market in 2025, driven by the extensive infrastructure and facility development required for colocation projects. General construction services encompass site preparation, core and shell development, installation and commissioning, and architectural and engineering design to establish the physical infrastructure of data center facilities.

The scope also includes critical security and facility management systems, such as fire and smoke detection, intrusion detection, access control, CCTV surveillance, external security fencing, vehicle crash barriers, and mantraps. Additionally, Data Center Infrastructure Management (DCIM) solutions enable effective monitoring and management of facility infrastructure and operations. Together, these services play an important role in supporting the development, security, and efficient operation of colocation facilities.

UPS systems accounted for the largest share of electrical infrastructure in 2025, representing approximately 28% of the overall market. Their significant market share reflects the growing need for reliable backup power and uninterrupted operations across data center facilities. To meet increasing power requirements, data center operators are increasingly deploying UPS systems with capacities above 750 kVA, particularly in large-scale facilities supporting high-density and critical workloads.

At the same time, smaller data centers and hyperscale in-rack UPS solutions continue to contribute significantly to UPS systems with capacities below 500 kVA. These systems are suited to facilities with lower or distributed power requirements. For example, OADC, a CPT2 data center facility in South Africa, is equipped with hot-swappable static UPS systems in a 2N configuration, offering up to ten minutes of backup power at full load. The adoption of such redundant and scalable UPS systems highlights the growing focus on power reliability, resilience, and operational continuity in data center infrastructure.

Cooling systems accounted for the largest share of the mechanical infrastructure market in 2025, highlighting their critical role in maintaining optimal operating conditions and managing heat generated by high-density IT equipment. Most modern data centers are designed based on the American Society of Heating, Refrigerating and Air-Conditioning Engineers (ASHRAE) data center cooling guidelines and the Uptime Institute’s Tier standards for redundant design.

The placement of cooling units, apart from CRAC and CRAH units, depends on the overall facility design and is determined by several factors, including hotspots, cold- and hot-air circulation, and the implementation of hot- and cold-aisle containment. These considerations help data center operators maintain efficient airflow, manage heat loads, and support reliable facility operations.

Chiller units accounted for the largest share of cooling systems in 2025, reflecting their important role in supporting efficient and reliable cooling operations in data centers. The major task of chiller units is to supply chilled water to CRAH units inside the data center.

Chillers can also be integrated with cooling towers, dry coolers, or condensers to reject heat from the facility and maintain optimal operating temperatures. Chillers are primarily used to facilitate water-based cooling, and although the adoption of water-based cooling techniques is growing gradually, their ability to efficiently manage heat loads continues to support a sizable share of the cooling systems market.

Air-based cooling techniques represented the largest component of cooling techniques in 2025, reflecting their widespread adoption across data center facilities. Air-based cooling techniques in data centers comprise DX-based CRAC units, free cooling solutions, air-cooled chiller-based cooling, and dry coolers, which help maintain suitable operating temperatures for IT equipment.

Innovations in free-cooling technologies, particularly the use of outside air to cool data centers without requiring on-site water, are expected to further support market growth during the forecast period. These solutions can help operators improve cooling efficiency while reducing water consumption, making them increasingly relevant as data centers focus on sustainable and resource-efficient operations.

Core & Shell Development represented the largest component of general construction in 2025, reflecting the significant role of building infrastructure in data center development. The construction of data centers is broadly divided into two types: greenfield and brownfield development, depending on whether a new facility is being developed or an existing facility is being upgraded or repurposed.

Building development is typically carried out by major construction contractors in coordination with design and infrastructure providers and data center operators to ensure that facilities meet the required technical, operational, and infrastructure specifications.

Tier III represented the largest component of tier standards in 2025, capturing approximately 56% of the overall market share, reflecting its widespread adoption across modern data center facilities. Tier III facilities are designed to provide a high level of availability, reliability, and maintainability, with infrastructure components that are concurrently maintainable. This design allows critical systems and equipment to be maintained, repaired, or replaced without interrupting data center operations.

Tier III facilities typically adopt a minimum N+1 redundancy configuration, providing an additional backup component to support continuous operations during maintenance or equipment failure. The combination of redundancy and concurrent maintainability makes Tier III infrastructure suitable for organizations that require reliable and resilient data center operations.