Data center, colocation market surpasses $25B, say

Data center, colocation market surpasses $25B, says 451 Research

January 5, 2015 | By Sean Buckley

It's never been a better time to be in the data center colocation market, one that 451 Research says has surpassed the $25 billion revenue run rate with 6 percent of data center providers accounting for over half of global revenue.

According to 451 Research's Datacenter KnowledgeBase (DCKB) database, the top 10 data center/colocation providers make up 28 percent of the $25 billion in revenue, while the top 60 players account for 52 percent of the revenue mix. Even though the market is going through consolidation, over 1,000 additional companies, a number of them being strong regional players, generate the remaining 48 percent of revenue.

The next few years are going to be a time of growth for colocation providers, which are going to expand their holdings. DCKB data revealed that there are 176 facility expansions and 134 new builds globally, with key regions such as New York City and London leading in square footage/power coming online.

While nearly 60 percent of the planned expansions and new data center builds will happen in North America, Asia-Pacific and EMEA have put together new expansion plans as well and 451 Research said it is actively researching those areas to determine where additional builds/expansions are likely.

Another key market to watch is Latin America, where data center providers are increasingly ramping up their average revenue per facility, representing 4.5 percent of the 3,685 data centers tracked by the DCKB and 5 percent of global sales.

Kelly Morgan, 451 Research director for multi-tenant data centers in North America, said that over the past decade, the majority of the investments in multi-tenant data centers has been made in large markets where there are many potential tenants.

"We are seeing growing interest in markets outside of those top few cities, however," Morgan said. "This is for several reasons, such as to reduce latency, to target medium-sized local businesses, or because operating costs are lower."

Morgan added that they "expect to see strong growth in several of these secondary markets over the next few years."

"The only way of discovering the limits of the possible is to venture a little way past them into the impossible."