GVR Report cover Europe Data Center Colocation Market Size, Share & Trends Report

Europe Data Center Colocation Market Size, Share & Trends Analysis Report By Colocation Type (Retail, Wholesale), By End-use (Healthcare, IT & Telecom), By Enterprise Size, By Region, And Segment Forecasts, 2021 - 2028

  • Report ID: GVR-4-68039-344-2
  • Number of Pages: 110
  • Format: Electronic (PDF)
  • Historical Range: 2016 - 2019
  • Industry: Technology

Report Overview

The Europe data center colocation market size was valued at USD 12.81 billion in 2020. It is expected to expand at a compound annual growth rate (CAGR) of 13.1% from 2021 to 2028. Building and operating a data center is an expensive affair and requires a large amount of capital. Small businesses often lack the budget to own a data center, which has led to the rising demand for data center colocation services across Europe. The deployment of colocation data centers helps enterprises in cutting down on maintenance costs while offering high bandwidth and scalability. Moreover, colocation presents an opportunity for data center providers to explore new strategic locations across Europe beyond the Frankfurt, London, Amsterdam, Paris (FLAP) markets.

Europe data center colocation market size, by colocation type, 2016 - 2028 (USD Billion)

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

The FLAP markets have been dominating the Europe 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 lack of 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. According to Cushman & Wakefield, the data center capacity across these countries is expected to rise to 937 MW by 2024 from 492 MW as of 2019.

The demand for high-capacity networks has experienced a surge with the emergence of edge computing solutions. The adoption of disruptive technologies such as autonomous vehicles, cloud computing, IoT, and advanced robotics has resulted in the rising demand for edge computing solutions in developed economies such as the U.K., Germany, and France. The growing adoption of these technologies has also led to the requirement of higher bandwidths and faster processing speeds. To cope with these challenges, it is essential to have low latency, which has increased the demand for data center colocation. Colocation allows cloud service providers to place the network architecture in proximity to the users and offer high bandwidth and reduced latency. The emergence of 5G has provided colocation service providers an opportunity to offer these services with improved connectivity across remote locations in Europe, thereby driving the market growth.

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

Europe Data Center Colocation Market Trends

Increasing capital expenditure in owning and maintaining huge computing facilities is a key driver expected to spur the adoption of colocation data centers in Europe. Moreover, predictable expenses, high reliability, easy scalability, all-in-all lower costs are some of the key factors influencing colocation demand, a trend expected to continue over the forecast period. However, increased travel cost when system needs to be operated manually coupled with drawbacks of long-term contracts with vendors may pose as some major market impediments.

With the emergence of edge computing applications, the demand for high capacity networks is increasing significantly. Also, to cope up with the challenges of network latency and the need for immediate real-time insights led to the evolution of multi-locational hybrid data architectures. As a result, the data transmission among the data center or private exchanges points has become crucial. Also, businesses are shifting to the cloud; the demand for seamless data transmission to perform digital operations has created the need for high bandwidth. The high interconnected bandwidth for in private exchange points allows faster data transmission among the enterprises. 

The emergence of technologies such as 5G, immersive technologies such as augmented reality, virtual reality, and AI has also contributed to the need for allocating higher bandwidths for sharing data between enterprises. Europe is witnessing a promising increase in its interconnection bandwidth capacity and the trend is expected to remain strong in the near future as well. The telecommunications sector presently holds the largest share in the market, thanks to the increased demand for high-speed connectivity for enhanced customer experience in the sector. Furthermore, the rising demand for reduced latency in data transfers as well as improved connectivity amid the surging adoption of smart devices is creating growth opportunities for colocation service providers in the region.

This surge has led to network capacity expansions through the 4G era and would eventually prepare the world for mass-market adoption of 5G networks. The growth can also be ascribed to the increase in the number of cellular radio sites and the deployment of additional wireless spectrum. Furthermore, as the industry moves toward the fifth generation of cellular network technology, the demand for mobile data for cloud gaming, OTT platforms, and immersive applications is expected to increase at a significant rate. As a result, network operators are forced to expand network capacities to provide enhanced customer experiences

The emergence of 5G networks, disruptive technologies such as AI, IoT, and other technologies have increased datacenter workloads over the last couple of years. Additionally, increased adoption of cloud computing and As-a-Service models across enterprises has resulted in the increased need for advanced skillsets alongside managing high workloads. Furthermore, the inability of organizations to retain and recruit trained staff to provide 24x7 services, notably in cloud configuration set-ups and other high-end applications, is expected to hinder the growth of the datacenter colocation market.

Colocation Type Insights

In terms of colocation type, the retail colocation segment accounted for over 70% of the revenue share in 2020, attributed to the rise in small and medium scale industries in the emerging countries across Europe. Small enterprises have limited data storage requirements, due to which they do not require dedicated data centers. As such, wholesale colocation services prove to be expensive for small businesses as they only offer space and power, whereas the IT infrastructure and staffing must be managed by the enterprises themselves. Retail colocation provides racks, private data center suites, cabinets, and staffing, which are suitable for small enterprises for a limited time.

Wholesale colocation data centers are still a preferred choice among large businesses as they offer large space, which can accommodate large data volume configurations. The implementation of GDPR has led to increased investments in the wholesale colocation space by major cloud service providers. These investments are a result of customers becoming critical about their data storage while closely monitoring the data storage methods. As such, wholesale colocation provides cloud service providers with an opportunity to localize their large data centers while complying with GDPR and gaining customer trust.

Enterprise Size Insights

The large enterprise segment accounted for the largest revenue share of over 60% in 2020. This is attributed to major cloud service providers and hyperscalers adopting colocation services. Large enterprises manage a large volume of data and require infrastructure with high capacities and ample floor space to accommodate the equipment. Datacenter colocation helps these enterprises to fulfill their power and space requirements with complete control over data center infrastructure. These factors have resulted in large enterprises shifting toward colocation services rather than building and operating their own data centers.

The rising number of startup businesses has fueled the demand for colocation data centers across Europe. SMEs cannot afford to build and operate data centers, which is why they depend on colocation data centers. Meanwhile, small enterprises do not require the set-up of extensive data center facilities. Therefore, several SMEs find it suitable to deploy colocation centers and save on fixed, operational, and maintenance costs, subsequently driving the market growth.

End-use Insights

The healthcare segment is expected to register the highest CAGR of over 15% over the forecast period. The growth is attributed to the increasing importance of data storage in the healthcare industry. Additionally, government regulations such as the (EU) 2016/679 adopted by the European Union in 2016 have made it essential for public and private healthcare service providers across Europe to maintain electronic health records of patients and protect patient privacy. Meanwhile, the data can also be used for healthcare and research purposes with the patient's consent. This has created a need for data storage across the healthcare industry, which is expected to rise further post the COVID-19 pandemic.

Europe data center colocation market share, by end-use, 2020 (%)

The IT and telecom segment dominates the market presently with the largest market share and is expected to continue its dominance over the forecast period. The large market share is due to the continuous development of software and application in the industry and the launch of several start-ups across the region. Meanwhile, the telecom sector has witnessed a surge in mobile internet users, which has created a massive demand for data storage in the past years. The advent of technologies such as 5G and IoT is expected to drive growth in the IT and telecom industry, creating substantial data volumes and in turn driving the market growth in the forthcoming years.

Regional Insights

The U.K. is expected to register the highest CAGR of more than 10% over the forecast period. This growth is attributed to the huge volume of internet traffic and the presence of several cloud service providers in the country. In addition to the U.K., FLAP markets are the primary markets in the region attracting significant investments from international markets owing to enhanced interconnection hubs, high bandwidth connectivity, and cloud-friendly infrastructure.

Nordic countries are expected to attract substantial investments with the data center capacity to grow from 102 MW in 2019 to 337 MW by 2024. As data center operators and their clients move toward greener initiatives, Oslo has emerged as an attractive option due to the low-cost hydropower available in the city. The Norwegian government offers energy and tax incentives to attract investments from hyperscalers in this country. Furthermore, Warsaw in Poland has emerged as a hotspot for investment in the CEE region with IT giants Microsoft and Google, Inc. planning to invest USD 1 billion and USD 2 billion respectively for their cloud locations.

Frankfurt, London, Amsterdam, and Paris, together (FLAP), cater to a huge volume of internet traffic and are the largest internet exchanges in the European region. These are also the primary markets for datacenter operations. These markets are acquainted with enhanced interconnection hubs, high-end connectivity, and cloud-friendly infrastructure that attract large investments from Central and Eastern Europe and other international markets. According to CBRE, a real estate agency, in 2019, the FLAP market witnessed more than 200 MW of leasing colocation centers, chiefly attributed to the increasing demand from cloud services providers. Enterprises are likely to adopt colocation facility centers for their hybrid IT environments, thereby creating avenues for vendors in the colocation datacenter space.

The data center market in Europe is expected to be affected dramatically by the Russia-Ukraine war. Data center construction costs are likely to rise due to high inflation, supply disruptions for materials produced in Ukraine and Russia, and high energy costs. This is anticipated to compel data center operators to postpone expansions and construction of new data centers with the hope that costs will eventually come down in the future. This is expected to impact the data center colocation market across Europe.

Key Companies & Market Share Insights

Several market players are focused on mergers and acquisitions, which has been one of the primary growth factors in Europe. Companies across the globe are investing in acquiring data centers in Europe to localize their presence. For instance, Iron Mountain, a U.S.-based colocation provider, completed the acquisition of Credit Suisse data center in London, which has helped the company to bolster its presence across the EMEA market. Furthermore, another U.S.-based company, Equinix, Inc., formed a joint venture with GIC Private Limited to develop and operate xScale data centers in Europe. Some of the prominent players operating in the Europe data center colocation market are:

  • Equinix, Inc.

  • Cyxtera Technologies, Inc.

  • Interxion

  • CyrusOne, Inc.

  • NTT Limited

  • Global Switch

  • Verne Global

Europe Data Center Colocation Market Report Scope

Report Attribute


Market size value in 2021

USD 14.21 billion

Revenue forecast in 2028

USD 33.66 billion

Growth Rate

CAGR of 13.1% from 2021 to 2028

Base year for estimation


Historical data

2016 - 2019

Forecast period

2021 - 2028

Quantitative units

Revenue in USD Million and CAGR from 2021 to 2028

Report coverage

Revenue forecast, company ranking, competitive landscape, growth factors, and trends

Segments covered

Colocation type, end-use, enterprise size, region

Regional scope

Europe (Western Europe, Benelux, Nordic, CEE, Rest of Europe)

Country scope

U.K.; Germany; France; Austria; Switzerland; Belgium; Netherland; Luxembourg; Norway; Sweden; Denmark; Finland; Bulgaria; Czech Republic; Estonia; Latvia; Lithuania; Poland; Croatia; Romania; Hungary; Slovakia

Key companies profiled

Equinix Inc.; Cyxtera Technologies Inc.; Interxion; CyrusOne, Inc.; NTT Limited; Global Switch; Verne Global

Customization scope

Free report customization (equivalent to up to 8 analysts’ working days) with purchase. Addition or alteration to country, regional & segment scope.

Pricing and purchase options

Avail customized purchase options to meet your exact research needs. Explore purchase options.

Segments Covered in the Report

The report forecasts growth in terms of revenue on the regional and country levels and provides an analysis of the latest industry trends and opportunities in each of the sub-segments from 2016 to 2028. For this study, Grand View Research has segmented the Europe data center colocation market report based on colocation type, end-use, enterprise size, and region:

  •  Colocation Type Outlook (Revenue, USD Million, 2016 - 2028)

    • Retail Colocation

    • Wholesale Colocation

  • End-use Outlook (Revenue, USD Million, 2016 - 2028)

    • Retail

    • BFSI

    • IT & Telecom

    • Healthcare

    • Media & Entertainment

    • Others

  • Enterprise Size Outlook (Revenue, USD Million, 2016 - 2028)

    • Small & Medium Enterprises

    • Large Enterprises

  • Region Outlook (Revenue, USD Million, 2016 - 2028)

    • Europe

      • U.K.

      • Germany

      • France

      • Austria

      • Switzerland

      • Benelux

        • Belgium

        • Netherlands

        • Luxembourg

      • Nordic

        • Norway

        • Sweden

        • Finland

        • Denmark

      • CEE

        • Bulgaria

        • Czech Republic

        • Estonia

        • Latvia

        • Lithuania

        • Hungary

        • Poland

        • Slovakia

        • Croatia

        • Romania

      • Rest of Europe

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