San Francisco, 22 January 2030: The Report Europe Data Center Colocation Market Size, Share & Trends Analysis Report By Type (Retail, Wholesale), By End-use (IT & Telecom, Healthcare), By Enterprise Size (Large Enterprises, SMEs), And Segment Forecasts, 2023 - 2030

The Europe data center colocation market size is anticipated to reach USD 48.6 billion by 2030, growing at a CAGR of 15.3% from 2023 to 2030, according to a recent study by Grand View Research, Inc. A need for floor space, growing data center infrastructure costs, and increasing power costs drive the market in the region. Enterprises are opting for colocation data centers owing to better service and for colocation data centers near the user. Further, colocation data center providers are also fulfilling space and power requirements while offering them the option to scale up their infrastructure as required.

The ongoing technological boom with the rollout of devices equipped with advanced technologies such as 5G, Internet of Things (IoT), Artificial Intelligence (AI), and Augmented Reality (AR) is expected to drive the market growth further. Considering that these technologies require improved network connectivity and reduced latency, the interconnectivity across Europe will also rise, presenting an excellent opportunity for colocation providers to localize their services. The colocation market in Europe is further expected to gain traction amid the COVID-19 pandemic. With several organizations adopting the work-from-home policy, enterprises are moving toward multi-tenant data centers to increase user proximity. Lockdowns imposed across numerous countries have led to a surge in the use of OTT services, which is also expected to fuel the demand for colocation facilities in Europe.

Several colocation data center operators are majorly relying on small cell installations for improving network coverage. Similarly, mobile operators are also anticipated to rely on small cells to increase data network capacity in traffic-congested areas. The small cell technology adds radios per subscriber and extends users' enhanced signal quality requisite for effective data transfer. The proximity between radio sites addresses the short signal reach issue of higher frequency 5G technology. Subsequently, small cells are becoming the go-to solutions for mobile operators to expand the data capacity of the network. The increasing data traffic and associated need for expanding network capacity are anticipated to drive industry growth over the coming years.

Major factors driving the growth of the Europe data center colocation industry include increasing demand for interconnection bandwidth and rising data traffic. With the emergence of edge computing applications, the need for high-capacity networks is growing considerably, and coping with the issues of network latency and the need for real-time insights led to the evolution of multi-locational hybrid data architectures, which has expanded the demand for transmission of data among private exchange points or data centers. Besides, businesses are shifting to the cloud, requiring higher bandwidth and enabling rapid, seamless data transfer and processing speeds.

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The France, London, Amsterdam, Paris (FLAP) markets have dominated Europe's data center colocation for many years. These markets are still critical to the data center ecosystem from the market entry point of view. However, the FLAP markets have become mature and face limitations related to physical spaces and the need for more energy to power the data centers. Such constraints have propelled colocation providers to search for new locations such as Oslo, Berlin, Zurich, Reykjavik, Milan, Warsaw, Prague, and Vienna Madrid. These countries are regarded as potential hotspots for data center development across Europe.

Europe Data Center Colocation Market Report Highlights

• Regarding colocation type, the retail colocation segment held the largest market share in the region in 2022. SMEs' increasing deployment of retail colocation is responsible mainly for segment growth in the market. Retail colocation offers servers, racks, power, cooling, and space, among others, making it an affordable option for small enterprises
• Regarding end use, the IT and telecom segment dominated the market with the largest revenue share in the region in 2022. This is attributed to the increasing telecom network with the rollout of 5G and new application development for smart devices
• The small and medium enterprise segment is expected to witness the highest CAGR over the forecast period in the regional market owing to the increasing number of startup businesses adopting colocation services across the region
• The Nordic region is projected to grow more than 15% over the forecast period. This growing number of enterprises using cloud computing across Nordic countries, which is the highest across Europe, has been driving the growth of the Nordic region in the regional market. Additionally, the region has a higher proportion of ICT specialists relative to its population compared to other EU countries

Factors such as stringent environmental regulations in Europe and regional diversity are expected to challenge the market growth in the region. Colocation service providers may face contracting and multi-national product pricing complications with 23 languages spoken and 28 different currencies operating across Europe. Furthermore, such diversity increases data sovereignty issues across borders as GDPR has added liability and complexity to data management. However, companies can overcome these challenges by localizing their colocation services across European countries.

The high costs associated with owning and maintaining a data center, particularly for companies that generate inconsistent data volumes, are expected to be a key factor favoring market growth. Besides capital expenditure savings, data center colocation offers several other benefits to customers. Research studies suggest that owning or constructing a data center facility can cost over USD 300 per square foot, in addition to the cost incurred for laying the required fiber cabling. In such situations, in-house handling of an entire data center facility is a high-cost component for SMEs, whereas large-scale organizations can easily absorb this cost. Data center colocation is one solution that supports SMEs with a viable and affordable alternative to renting data center space, which is expected to drive market growth over the forecast period.

Europe Data Center Colocation Market Report Scope

The market is driven by the significant demand for colocation services by hyperscale data center consumers such as public cloud service providers and large internet businesses. Besides setting up large data center campuses in remote areas, major cloud services providers such as Microsoft Azure, Google Cloud Platform, and Facebook has leased bunches of capacity from colocation data center companies in densely populated areas. The rise in colocation services results from increased network connectivity and the number of localized data centers in compliance with the General Data Protection Regulation (GDPR) to ensure data does not cross country borders. Europe is also witnessing increased demand from the Chinese telcos and hyper scalers looking to expand their global networks.