The global colocation market will reach $33.2 billion by 2018, according to 451 Research's latest quarterly Datacenter Knowledgebase (DCKB) release, which tracks nearly 4,800 data centers operated by 1,286 companies worldwide.
In the fourth quarter of 2015, the data center colocation market saw $27 billion in annualized revenue, with the majority of this revenue (54.6 percent) continuing to be derived from local providers with less than $500 million in annualized colocation revenues.
The company estimated that the global colocation market would grow in terms of total operational square feet from today's 132.4 million square feet to 176.5 million by the end of 2018.
Among the largest providers, Equinix is the market leader in the combined wholesale and retail colocation market with a share of 8.1 percent of global annualized wholesale and retail colocation revenue.
Digital Realty, primarily a wholesale provider, is the second largest supplier in terms of revenue at 5.6 percent, but leads the global market in terms of operational square feet with a 7.8 percent share globally.
"Equinix and Digital Realty have been astute in their acquisitions—making targeted purchases in key geographies," Kelly Morgan, research director for North America Datacenters at 451 Research, told eWEEK. "They also have not been afraid to buy some of the larger providers with multiple assets, which have allowed them to grow more quickly. Both have also had fairly clear business models, though Digital's has shifted somewhat since the purchase of Telx, which they have articulated well to lenders and investors, enabling them to raise capital and grow more quickly than competitors."
The report estimated that today, the world's largest region in terms of total operational space for colocation—space supporting IT equipment—is Asia Pacific (40.1 percent).
North America is second largest with 33.7 percent of total global operational square feet, while Europe, Middle East and Africa (EMEA) accounts for another 22.1 percent. The remaining 4.1 percent of space is in Latin America.
"We continue to see strong enterprise adoption of hybrid solutions—a mixture of owned data centers, leased data center space, managed and dedicated hosting, and cloud—infrastructure-as-a-service as well as software-as-a-service," Morgan said. "Since many, if not most, cloud/hosting providers lease data center space, this has been driving strong demand in the sector and will continue to do so. We are seeing a continued move to low-cost sites—for example, in states with low electricity prices—which tend to be rural."
Morgan noted, however, that there is also growing interest in having small data centers close to end users, particularly for content and cloud providers, and these tend to be in or near urban areas.
"So, around half of the multitenant data center space in the U.S. has been built in the top 10 markets, and some continue to be popular. We expect to see growth in many smaller cities or rural areas going forward as well," she said.