Global Data Center Colocation Market Outlook & Forecast 2023-2028: 5G Deployments Fueling Edge Data Center Demand and Surge in Rack Power Density

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Mar 18, 2024, 17:30 ET

DUBLIN, March 18, 2024 /PRNewswire/ -- The "Global Data Center Colocation Market - Outlook & Forecast 2023-2028" report has been added to ResearchAndMarkets.com's offering.

The data center colocation market was valued at USD 30.42 billion in 2022 and is forecast to grow at a CAGR of 7.25% from 2022 to 2028, reaching USD 46.3 billion in 2028

The European data center colocation market is attracting substantial investments, with Western Europe drawing the focus of those global operators seeking to extend their presence. Furthermore, favorable policies make the Nordics an attractive hub for investments. The major contributors to green data center development in Latin America include Brazil, Chile, Argentina, and Paraguay; these countries' data center operators and governments are working toward adopting renewable energy and other measures.

In Central and Eastern Europe, data center operators are securing land for new facilities or repurposing existing buildings to meet the growing demands for infrastructure. Over USD 450 million was invested in Central & Eastern European countries in 2022.

The UAE and Saudi Arabia are the major contributors to power capacity in the Middle East & Africa region, accounting for a share of around 24% and 16%, respectively. The data center colocation market in these countries is expected to skyrocket in four to five years due to the shift from the oil economy to the digital economy. In addition, South Africa is the major contributor to power capacity in Africa, accounting for a share of over 60%; Nigeria and Kenya follow this. Cloud-based services, smart city developments, and fiber connectivity are the other factors driving continuous colocation data center investments across the region.

The Middle East & Africa market is continuously growing in terms of connectivity by deploying new submarine cables, such as Africa-1, 2Africa, India Europe Xpress (IEX), Raman, Saudi Vision, Blue, Equiano, Medusa Submarine Cable System, and SeaMeWe - 6, which will be ready for services during the forecast period.

Data centers in the Middle East & Africa region invest in cooling infrastructure due to the prevalence of high temperatures in some countries. In 2022 cooling systems accounted for over 65% of the total mechanical infrastructure.

KEY MARKET TRENDS

Growing Focus on Sustainability

Companies in the global data center colocation market focus on using renewable energy as their main power source. Operators are planning to reduce environmental harm by using clean energy solutions. This change is part of a larger trend in the industry to adopt renewable sources, such as solar and wind power, to run data centers and other infrastructure.

5G Deployments Fueling Edge Data Center Demand

5G network deployments have fueled digital transformation, the growth of IoT and smart cities, and the fourth industrial revolution. All the regions are working toward adopting digital transformation to attract foreign investments.
Rapid investments in 5G technology have increased the demand for high-bandwidth internet in Tier II and Tier III cities and contributed to substantial data volume. These factors have accelerated data center developments to process the information at par with the major countries and supported the data center colocation market growth.
The deployment of 5G services has impacted the ICT, government, manufacturing, services, agriculture, and retail industries. 5G network services play a key role in supporting enterprise digitalization, thereby driving the adoption of IoT applications.

Adoption of Advanced IT Infrastructure in Data Centers

Data centers are equipped with servers and network and storage solutions. Traditional IT infrastructure constantly influences the data center industry as it requires more physical space and is more expensive, resulting in a drop in demand.
Converged infrastructure is a hardware platform where servers with internal or external storage options and network switches are offered as integrated rack-scale systems.
ARM is a chip technology firm that creates intellectual property, which other firms license to form their processor chips. An ARM server is an enterprise-class computer server that employs many ARM processors rather than a traditional processor.
Server virtualization divides the physical server into multiple and isolated servers using various software applications. Server virtualization is widely adopted in the data center colocation market since a single physical server can host dozens of applications as virtual machines instead of hosting each application in its designated server, reducing recurring technology expenses by 50%.

Surge in Rack Power Density

Rack power density is one of the critical factors in data center design, capacity planning, cooling, and power provisioning.
Over the past few years, an unprecedented rise in the rack power density of IT equipment has been observed. The adoption of compute-intensive workloads, such as AI, IoT, Augmented and Virtual Reality (AR/VR), and the popular cryptocurrency mining trend have increased the data storage and processing requirements, necessitating high-density racks.
The surge in demand for High-Performance Computing (HPC), led by the adoption of converged and hyper-converged solutions and virtualization techniques, will contribute to the rise in rack power density to an average of 10 to 12 kW during the forecast period.
The growth in rack power density has propelled the use of innovative and flexible facility designs along with augmenting the adoption of rack-level UPS solutions and diverse electricity feeds for racks.

Market Growth Enablers

Growing M&A and Joint Ventures in the Market
Growing Submarine & Inland Connectivity
Big Data & IoT Fueling Data Center Investments
Government Support for Data Center Developments

Market Restraints

Rising Carbon Emissions from Data Centers
Location Constraints on Data Center Development
Concerns of Power Availability Challenges
Lack of Skilled Data Center Professionals
Security Challenges in Data Centers
High Maintenance Costs & Inefficiencies
Supply Chain Disruptions

SEGMENTATION INSIGHTS

Segmentation by Colocation Services

Retail Colocation
Wholesale Colocation

Segmentation by Infrastructure

Electrical Infrastructure
Mechanical Infrastructure
General Construction

Segmentation by Electrical Infrastructure

UPS Systems
Generators
Transfer Switches & Switchgear
PDUs
Other Electrical Infrastructure

Segmentation by Mechanical Infrastructure

Cooling Systems
Racks
Other Mechanical Infrastructure

Segmentation by Cooling Systems

CRAC & CRAH Units
Chiller Units
Cooling Towers, Condensers & Dry Coolers
Economizers & Evaporative Coolers
Other Cooling Units

Segmentation by Cooling Techniques

Air-based Cooling
Liquid-based Cooling

Segmentation by General Construction

Core & Shell Development
Installation & Commissioning Services
Engineering & Building Design
Fire Detection & Suppression
Physical Security
DCIM/BMS Solutions

VENDOR LANDSCAPE

Wholesale and retail colocation vendors are expected to thrive in the future due to the increased demand in the market. Various sectors, including BFSI, IT/telecom, and cloud, drive the demand for colocation services. The global data center colocation market has grown significantly over the last few years, with investments from global, regional, and data center operators.

The development of hyperscale data center campuses in all regions will bring in a significant revenue opportunity for vendors that offer the fastest-growing technologies, such as liquid immersion cooling, direct-to-chip cooling, lithium-ion UPS, HVO generators, microgrid technologies, renewable power solutions, and net-zero water data centers.

Prominent Data Center Investors

China Mobile International
China Telecom
China Unicom
Chindata Group
CoreSite
CyrusOne
Digital Realty
EdgeConneX
Equinix
GDS Services
NTT Data
STACK Infrastructure
ST Telemedia Global Data Centres
Vantage Data Centers
VNET

Other Prominent Vendors

365 Data Centers
AdaniConneX
Africa Data Centres
AirTrunk
Aligned Data Centers
American Tower
Atman
atNorth
AT TOKYO
Aruba
Big Data Exchange
CDC Data Centres
Center3
Chayora
CloudHQ
Cologix
Colt Data Centre Services
Compass Datacenters
COPT Data Center Solutions
CtrlS Datacenters
Cyxtera Technologies
DATA4
DataBank
DC BLOX
DCI Indonesia
Edge Centres
ePLDT
Flexential
Global Switch
Green Mountain
Gulf Data Hub
H5 Data Centers
HostDime
Iron Mountain
Internet Thailand
KDDI
Keppel Data Centres
Khazna Data Centers
LG Uplus
MettaDC
NEXTDC
Open Access Data Centres
Orange Business Services
Princeton Digital Group
QTS Realty Trust
Rostelecom Data Centers
Sabey Data Centers
Skybox Datacenters
Stream Data Centers
Scala Data Centers
Sify Technologies
SUNeVison Holdings (iAdvantage)
Switch
T5 Data Centers
Tenglong Holding Group
TierPoint
Turkcell
Urbacon Data Centre Solutions
Viettel IDC
Wingu
Yondr
Yotta Infrastructure

New Entrants

AQ Compute
Corscale Data Centers
Gaw Capital Partners
EDGNEX Data Centres by DAMAC
ESR
Gatineau Data Hub (GDH)
iMCritical
IXAfrica
Kasi Cloud
PowerHouse Data Centers
Quantum Loophole
QScale
YCO Cloud
YTL Data Center

For more information about this report visit https://www.researchandmarkets.com/r/nrzyy8

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