Data center colocation market seen reaching $202.71 billion by 2030

A new Allied Market Research report projects the global data center colocation market will grow from $46.08 billion in 2020 to $202.71 billion by 2030 as cloud adoption, AI workloads and digital infrastructure demand accelerate. The report points to hybrid cloud, edge computing and sustainability as major forces reshaping where enterprises place data and how providers compete.

Why it matters: - Colocation is becoming a core layer of digital infrastructure as enterprises need faster, more scalable and more cost-efficient ways to store and move data. - The market’s growth reflects broader shifts in cloud computing, AI, big data, IoT and hybrid IT, all of which increase demand for reliable third-party data center capacity. - Providers that can offer power, cooling, connectivity and security at scale are positioned to capture enterprise spending as digital transformation expands across industries.

What happened: - Allied Market Research projected the global data center colocation market will rise from $46.08 billion in 2020 to $202.71 billion by 2030. - The report forecasts a 15.7% compound annual growth rate from 2021 to 2030. - The report links growth to cloud expansion, enterprise digitization, AI adoption, big data analytics, IoT and the need for scalable storage. - Allied Market Research published the report on June 18, 2026. - The report includes a downloadable brochure and a purchase option for the full report.

The details: - Colocation lets enterprises lease space, power, cooling and network infrastructure inside third-party data centers instead of building their own facilities. - The model lowers capital spending and gives businesses access to redundant power, advanced cooling, physical security, network connectivity and disaster recovery capabilities. - Hybrid and multi-cloud strategies are increasing demand for colocation sites that can act as interconnection hubs between public cloud and physical infrastructure. - AI and machine learning workloads are driving demand for high-density computing environments with stronger power and cooling systems. - Rising data generation, cloud migration, cybersecurity concerns and low-latency connectivity needs are also supporting market expansion. - The report says major demand is coming from banking, healthcare, retail, manufacturing, telecommunications and government services. - The report flags rising energy costs, regulatory compliance and infrastructure modernization as key challenges.

Between the lines: - The market is shifting from a simple space-and-power business to a strategic connectivity and workload-enablement layer. - Edge computing is emerging as a major growth area because applications such as autonomous vehicles, industrial IoT, smart cities, augmented reality and real-time analytics need local processing. - Sustainability is now a competitive factor, with providers investing in renewable energy, efficient cooling and carbon reduction programs. - Competition is increasingly centered on reliability, interconnection, geography, energy efficiency and customer service rather than only raw capacity. - The report suggests larger providers are gaining share, while regional operators still matter for local demand and specialized workloads.

What's next: - Providers are expected to keep expanding capacity, especially for AI-ready and edge-focused infrastructure. - More investment is likely to flow into automation, predictive maintenance and intelligent monitoring to improve operating efficiency. - Governments and investors are expected to continue backing digital infrastructure, even as data privacy, cybersecurity and sustainability rules shape where facilities are built. - The report expects sustainability and interconnected ecosystems linking cloud platforms, enterprise networks and digital services to become more important over the forecast period.

The bottom line: - Colocation is moving from back-end infrastructure to a strategic enabler of cloud, AI and edge computing, and the market outlook remains strong through 2030.