U.S. Data Center Colocation Market - Industry Outlook & Forecast 2024-2029

U.S. Data Center Colocation Market - Industry Outlook & Forecast 2024-2029

The U.S. data center colocation market by investment is expected to grow at a CAGR of 13.81% from 2023 to 2029.

KEY HIGHLIGHTS

• Digitalization across businesses will contribute to a surge in data center investments by colocation, cloud, Internet, and telecommunication providers. Telecom companies, such as AT&T, T-Mobile, CenturyLink, and Qualcomm, are responsible for deploying 5G services and the gradual pathway being made for the 6G spectrum in the US.
• Supply chain hurdles, rising inflation rates, the deficit in skilled workforce, and power-related restraints will harm the U.S. data center colocation market.
• The Texas data center market is highly competitive, with several colocation operators entering the state and developing their data center facilities.
• The United States market is among the costliest for developing a data center facility. The average cost ranges between $10-$11 million per MW. The cost is likely to increase by 5-7% on a YoY trend basis.
• The core submarkets have land and power constraints that limit the opportunities for new companies to enter the market. However, several new submarkets, such as Aurora and Elk Grove Village, are preferred.

The report includes the investment in the following areas:

Segmentation by Colocation Type

• 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

Segmentation by Tier Standard

• Tier I & II
• Tier III
• Tier IV

MARKET OPPORTUNITIES & TRENDS

Edge Data Centers & the Advent of the 6G Era

The U.S. is one of the fastest-growing countries in terms of technological development and innovations. The upcoming sixth-generation (6G) networks are anticipated to bring advanced networking technologies to make implementing the Industrial Internet of Things (IIoT) easier. These improved networks will offer enhanced connectivity and capabilities, simplifying the integration of IoT into different industries and making it more accessible for businesses to utilize its benefits.

Sustainability Initiatives by Colocation Operators

Colocation companies nationwide are passionate about renewable energy and curtailing their carbon emissions as much as possible to achieve their ambitious sustainability targets. Operators plan to reduce harm to the planet by using clean energy sources instead of traditional fossil fuels that are being depleted at an alarming rate. This change is part of a larger trend in the industry to adopt renewable power sources, such as solar and wind power, to run data centers and power other associated infrastructure.

Colocation Demand Revolutionized by AI & VR

Artificial intelligence (AI) and virtual reality (VR) drive the U.S. data center colocation market growth. There is a need for dependable and scalable data center infrastructure as AI and VR gain traction across different industries. Colocation providers experience a significant increase in demand as businesses look for reliable hosting solutions to accommodate their AI and VR applications, ensuring top-notch performance and seamless connectivity.

Colocation Data Center Facilities on the Rise

The market saw a surge in the development of data center facilities. Key colocation operators include Equinix, Digital Realty, Aligned Data Centers, CyrusOne, QTS Realty Trust, NTT DATA, STACK Infrastructure, Vantage Data Centers, DataBank, Switch, and Compass Datacenters. The U.S. data center colocation market also saw several new entrants, including Tract, Crane Data Centers, Corscale Data Centers, Rowan Digital Infrastructure, Edged Energy, and other operators.

GEOGRAPHICAL ANALYSIS

• Data center operators are keenly interested in the Southeastern, especially in Virginia. They make substantial investments to expand their presence and industry share in the area.
• Data center operators see the Midwestern U.S. as a major hotspot. They build facilities in prime locations, such as Illinois, Iowa, Nebraska, and Ohio, to take advantage of the region's potential.
• The Western U.S. region is a full-grown colocation market that includes Oregon, Idaho, Utah, and California. These states are home to numerous data center facilities offering colocation services to businesses and organizations in the area.
• The U.S. data center colocation market is projected to experience substantial growth in New York, New Jersey, Pennsylvania, and Connecticut, which will improve connectivity in the northeastern US.
• The data center space will likely increase in three key locations that are major data center hubs: Phoenix, Arizona, and Northern Virginia. These regions are major data center locations, attracting substantial investments and attention from colocation providers.

Segmentation by Region

• Southeastern U.S.
• Midwestern U.S.
• Southwestern U.S.
• Western U.S.
• Northeastern U.S.

VENDOR LANDSCAPE

• Both wholesale and retail colocation vendors are expected to thrive due to increased demand in the market—various sectors, such as the BFSI, IT, telecom, and cloud, demand colocation services.
• This rise in colocation operators will likely result in strong competition. The competition will lead to many options for clients seeking colocation services.
• The U.S. data center colocation market has the presence of all the major global colocation operators, such as Equinix, Digital Realty, QTS Realty Trust, CyrusOne, Aligned Data Centers, DataBank, Iron Mountain, Vantage Data Centers, NTT DATA, STACK Infrastructure, and others.
• Despite the existence of most major data center operators across the country, several new companies have developed significant data center campuses in the Northern Virginia area. PowerHouse Data Centers and Corescale Data Centers have developed colossal facilities across Virginia.
• Skybox Datacenters is among the major operators in the Texas data center market, developing several data center campuses and facilities across the market. The company has developed facilities in partnership with Prologis and Bandera Ventures.
• Tract, Corscale Data Centers, Crane Data Centers, Edged Energy, Rowan Digital Infrastructure, NE Edge, and Quantum Loophole are some of the new players in the U.S. data center colocation market. These players will likely disrupt the market share and further bolster the competition level.

Prominent Data Center Investors

• CyrusOne
• DataBank
• Digital Realty
• Equinix
• NTT DATA

Other Data Center Investors

• Aligned Data Centers
• American Tower (CoreSite)
• AUBix
• Centersquare
• CloudHQ
• Cologix
• Compass Datacenters
• COPT Data Center Solutions
• DartPoints
• DC BLOX
• Edge Centres
• EdgeConneX
• EdgePresence
• EdgeCore Digital Infrastructure
• Element Critical
• Flexential
• fifteenfortyseven Critical Systems Realty (1547)
• H5 Data Centers
• HostDime
• Iron Mountain
• Netrality Data Centers
• Novva Data Centers
• PowerHouse Data Centers
• Prime Data Centers
• QTS Realty Trust
• Sabey Data Centers
• Skybox Datacenters
• Stream Data Centers
• STACK Infrastructure
• Switch
• T5 Data Centers
• TierPoint
• Vantage Data Centers
• Vapor IO
• Yondr
• 365 Data Centers

New Entrants

• Corscale Data Centers
• Crane Data Centers
• Edged Energy
• NE Edge
• Quantum Loophole
• Rowan Digital Infrastructure
• Tract

KEY QUESTIONS ANSWERED:

1. How big is the U.S. data center colocation market?

2. What is the growth rate of the U.S. data center colocation market?

3. What are the key trends in the U.S. data center colocation market?

4. How many MW of power capacity is expected to reach the U.S. data center colocation market by 2029?

5. What is the estimated market size in terms of area in the U.S. data center colocation market by 2029?