Over current years, AI has fueled information middle enlargement—now, it’s reshaping the colocation market.
New analysis from Synergy Analysis Group finds that the worldwide information middle colocation market is present process a major transformation.
Just a few years in the past, the colocation market was valued at $54 billion, but it surely’s rising quick. Analysis and Markets expects the market to develop to $133.3 billion by 2029.
Because the colocation business scales to satisfy the subsequent wave of knowledge middle demand, the market is starting to shift away from established hubs towards rising areas.
In 2024, Synergy Analysis Group first reported that 20 metro areas account for 60% of the worldwide colocation market. The agency now forecasts that the expansion panorama seems dramatically totally different, with high-potential markets rising throughout Asia Pacific, Latin America, and Africa.
Key Findings
Key findings of Synergy’s newest colocation information middle market report embrace:
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The eight metros with the very best projected development charges by 2030 are Johor, Lagos, Santiago, Chennai, Kuala Lumpur, Queretaro, Jakarta, and Mumbai.
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Solely three current main markets seem on the high-growth listing: Northern Virginia, Mumbai, and Phoenix.
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Energy constraints in established information middle hubs like Singapore, Amsterdam, and Dublin are resulting in deployments shifting to neighboring areas.
AI Drives Colocation Demand
AI is creating substantial demand throughout the colocation sector, although with distinct patterns primarily based on workload kind.
“AI is boosting information middle demand throughout the board, and the colocation market is definitely benefiting,” John Dinsdale, chief analyst at Synergy Analysis Group, informed DCN.
Dinsdale famous that AI coaching would sometimes happen in hyperscale self-build amenities, as location and latency are much less of a problem. Nevertheless, in some areas and circumstances, organizations would flip to leased amenities.
“AI inference is the place a variety of consideration is popping, and that infrastructure must be nearer to finish customers,” he stated. “That factors to a lot of the inference infrastructure being located in multi-tenant colocation amenities.”
Sustainability Influences Differ by Area
Whereas environmental issues have an effect on information middle deployments globally, Synergy Analysis Group doesn’t establish sustainability targets as the first issue driving differential development charges between rising and established markets.
“An exception could be someplace like Scandinavia, the place there’s the pure advantage of a cooler local weather and the opportunity of using that to assist drive down the impression of upper energy necessities for AI,” Dinsdale stated.
The analyst additionally famous that energy and house constraints are limiting development in a few of the conventional main colocation hubs, corresponding to Dublin, Amsterdam, and Singapore. In Europe, some curiosity is now shifting to Scandinavia and Southern Europe.
Within the case of Singapore, Dinsdale famous that it has apparent geographic and actual property constraints, so a variety of demand has shifted into neighboring Malaysia, fueling the hypergrowth there.
Colocation Business Management Stays Concentrated
Regardless of the geographic diversification of development, the colocation business’s management stays consolidated amongst established international and regional gamers.
Based on Synergy Analysis Group, the main colocation corporations worldwide are Equinix, Digital Realty, NTT, China Telecom, CyrusOne, GDS, KDDI (Telehouse), Chindata, and CenterSquare.
Geographically, the report mentions Northern Virginia, Mumbai, and Phoenix as supersized and high-growth markets. Some distinctive traits enable these three to keep up momentum whereas different established markets decelerate.
Dinsdale famous that Northern Virginia is a novel market. The world was foundational to the early years of Web infrastructure and has remained a middle of gravity for information middle exercise.
Mumbai and Phoenix, Dinsdale stated the regulation of enormous numbers is at play. In each math and advertising and marketing, the larger one thing will get, the harder it turns into to keep up excessive development charges, he defined.
“Neither of those two markets has but reached the stage the place they’re so massive that demand development fee slows down noticeably,” Dinsdale stated.
“Additionally, Mumbai advantages from being the heartbeat of the burgeoning Indian economic system, whereas Phoenix has one thing of a spillover impact from costly California areas and in addition advantages from plentiful house and energy.”
