Data center colocation market seen reaching $271.64 billion by 2035

The data center colocation market is projected to grow from $101.04 billion in 2026 to $271.64 billion by 2035, driven by AI workloads, cloud adoption and hybrid infrastructure demand. North America leads the market today, while wholesale and AI-ready facilities are expanding fastest.

Why it matters: - Data center colocation is becoming core infrastructure for cloud, AI and enterprise digital transformation. - The market is expected to nearly triple by 2035, signaling sustained demand for third-party facilities that provide space, power, cooling and connectivity. - Growth matters for enterprises that need scalable capacity without building their own data centers.

What happened: - The global data center colocation market was estimated at $91.38 billion in 2025. - The market is projected to rise to $101.04 billion in 2026 and reach $271.64 billion by 2035. - The forecast implies a 12.89% compound annual growth rate through 2035. - Market Research Future published the outlook on June 22, 2026.

The details: - Colocation services let businesses lease space, power, cooling and network connectivity inside third-party data centers. - Demand is being fueled by cloud computing, 5G rollout, IoT growth and generative AI applications. - Hybrid and multi-cloud strategies are increasing the need for neutral interconnection hubs. - AI workloads require high-density computing and specialized power and cooling that many organizations cannot build in-house. - Data sovereignty rules in Europe, Asia and emerging markets are supporting compliance-driven demand. - Edge computing expansion is creating demand for distributed facilities closer to end users. - SMEs are using retail colocation to avoid the capital cost of building private data centers. - Retail colocation held more than 70% of the market in 2025. - Wholesale colocation is the fastest-growing type, with a CAGR of about 18.6%. - Large enterprises accounted for about 63% of revenue in 2025. - IT and telecom represented about 30% of revenue in 2025. - Healthcare is the fastest-growing end-use segment. - Hybrid cloud is the fastest-growing deployment model, with a CAGR of about 13.1%. - North America held about 39% to 45% of the global market in 2025. - North America was valued at $32.9 billion in 2025 and is projected to reach about $120 billion by 2035. - The U.S. market was valued at $25.6 billion in 2025 and is projected to reach $81.26 billion by 2035. - Asia-Pacific is the fastest-growing region. - Europe remains the second-largest market. - The Middle East and Africa are emerging markets with growth potential. - Latin America is led by Brazil and is growing on cloud adoption and data residency needs. - The report includes a sample copy request and an in-depth market report.

Between the lines: - Power availability is becoming a major bottleneck, especially in markets like Northern Virginia, London and Singapore. - Data centers already consume about 1.5% of global electricity, and AI workloads are pushing that higher. - High build costs, sustainability pressure, cybersecurity risk and labor shortages are all limiting growth. - Providers are competing more on ecosystem density and connectivity than on price alone. - Wholesale campuses and AI-ready facilities are attracting the strongest investment because they can support large cloud and GPU deployments.

What's next: - Providers are likely to keep expanding AI-optimized capacity, liquid cooling and high-density power configurations. - Edge and wholesale colocation should keep growing as cloud, AI and 5G demand rise. - New investment is likely to shift toward markets with available power, land and renewable energy access. - M&A and vertical integration into managed services and cloud connectivity are likely to continue.

The bottom line: - Colocation is moving from a cost-saving option to a strategic layer of digital infrastructure, and AI is accelerating that shift.