The U.S. colocation market is experiencing unprecedented acceleration, valued at USD 22.2 billion in 2024 and projected to grow at a CAGR of 13.1%, reaching USD 58.8 billion by 2032. The growth is powered by massive data generation, widespread digital transformation, and increased reliance on IoT, AI, and cloud technologies across industries.
Colocation Becomes the Backbone of Modern Digital Infrastructure
As organizations generate more data than ever before, the need for scalable, secure, and cost-effective storage infrastructure continues to rise. Businesses across the U.S. are increasingly turning to colocation facilities for predictable pricing, high security, and flexible scalability—without the heavy capital expenditure of building private data centers.
Private data centers remain costly for SMEs, while public cloud environments pose security risks for enterprises handling sensitive information. Colocation bridges this gap, enabling organizations to rent bandwidth and data center space while maintaining control over their hardware assets.
Studies show that IT costs can make up 6% of operational spending, and colocation solutions can cut those expenses by up to 30%.
Emergence of Green Data Centers and ESG-Driven Operations
The market is seeing significant momentum behind green data centers, integrating renewable energy sources and advanced energy-efficient systems such as ENERGY STAR–rated HVACs and heat recovery solutions. Growing regulatory pressures and consumer expectations for environmental sustainability make ESG-focused colocation increasingly attractive.
Market Dynamics
Hybrid, Edge, and Multi-Cloud Solutions Lead Market Transformation
Edge data centers are surging in popularity amid rapid advances in AI, ML, 5G, autonomous vehicles, and IoT. By reducing latency and processing data closer to end users, edge facilities are supporting industries like healthcare, manufacturing, and smart cities.
Simultaneously, hybrid IT environments—blending private and public clouds—are creating strong demand for colocation sites offering direct connectivity to major cloud platforms, including:
- AWS
- Microsoft Azure
- Google Cloud
These multi-cloud integrations provide businesses with enhanced scalability, disaster recovery capabilities, and cost efficiency.
Market Segmentation Highlights
Type
- Retail Colocation — Largest category (75% share in 2024)
Driven by SME and startup adoption due to flexible plans, affordability, and operational scalability. - Wholesale Colocation — Fastest-growing
Favored by large-scale enterprises requiring massive capacity.
Organization Size
- Large Enterprises — Largest market share
Leveraging DCaaS for scalability and regulatory compliance; average enterprise stores ~10 PB of data. - SMEs — Fastest-growing (12.7% CAGR)
Digital transformation and security concerns push smaller companies toward colocation.
Vertical
- IT & Telecom — Largest share (30% in 2024)
High dependency on data storage, cloud adoption, and 5G expansion. - Healthcare — Fastest-growing
Accelerated digital health initiatives, telemedicine, wearables, and EHR adoption driving demand.
Regional Outlook
- Northeast — Largest region (40% share)
Home to major financial and technology hubs, along with advanced telecom infrastructure and access to renewable energy. - Midwest — Fastest-growing region
Rising digitalization in manufacturing, logistics, and smart city initiatives.
Market Landscape
The U.S. colocation market remains highly fragmented with major global providers and over 500 specialized regional operators.
Key Participants Include:
- Equinix, Inc.
- Digital Realty Trust, Inc.
- CyrusOne, Inc.
- CoreSite Realty Corporation
- Cologix
- Flexential
- Iron Mountain Incorporated
- Verizon Enterprise Solutions
- QTS Realty Trust
- Rackspace Technology
- Zayo Group, LLC
- Global Switch
Recent Industry Developments
- October 2024: Cologix secures USD 1.5 billion to accelerate development of next-generation data centers across North America.
- April 2024: Equinix and PGIM Real Estate launch their first xScale data center in Silicon Valley with a USD 600 million combined investment.
Comments