European Data Center Colocation Market Set to Grow at 13.68% CAGR to Reach $226.76 Billion by 2034

Europe's data center colocation market is projected to grow at a CAGR of 13.68% from 2025 to 2034, reaching $226.76 billion by 2034. The market is driven by the growing need for safe, scalable, and affordable IT infrastructure, as well as the growth of edge computing and cloud computing. The market is expected to be driven by the growth of edge data centers, increased demand for hybrid and multi-cloud environments, and the adoption of liquid cooling and energy-efficient infrastructure. However, high capital and operational costs, power availability constraints, and variability in environmental regulations across European countries are some of the challenges facing the market.

The European data center colocation market is poised for significant growth, projected to expand at a compound annual growth rate (CAGR) of 13.68% from 2025 to 2034, reaching a forecasted value of $226.76 billion by 2034 [1]. This growth is driven by the increasing demand for safe, scalable, and affordable IT infrastructure, as well as the rapid adoption of cloud computing and edge computing technologies.

The market is being propelled by several key factors. The growth of edge data centers to support low-latency applications, the increased demand for hybrid and multi-cloud environments, and the rising adoption of liquid cooling and energy-efficient infrastructure are all significant drivers [1]. Additionally, the market is being fueled by the expansion of hyperscale colocation partnerships with global cloud providers, reflecting the industry's shift towards more integrated and scalable solutions.

However, the market is not without its challenges. High capital and operational costs in establishing new data center facilities, power availability constraints and grid limitations in urban areas, and variability in environmental regulations across European countries pose significant hurdles [1]. Furthermore, increasing cybersecurity risks and the need for robust data protection, as well as talent shortages in specialized IT and data center operations, are additional challenges that the industry must address.

The European data center colocation market is segmented based on diverse applications and business models, with key applications including IT and telecom, banking, financial services, insurance (BFSI), government, healthcare, manufacturing, retail, and others [1]. The market distinguishes between retail colocation, catering to smaller businesses requiring flexible solutions, and wholesale colocation, designed for large-scale enterprises with high-volume data needs.

In conclusion, the European data center colocation market is experiencing rapid growth, driven by technological advancements and evolving business needs. However, it faces several challenges that must be addressed to ensure sustainable and profitable growth. Investors and financial professionals should closely monitor these trends and consider the opportunities and risks associated with this dynamic market.

References:
[1] https://www.globenewswire.com/news-release/2025/06/13/3099158/0/en/Europe-Data-Center-Colocation-Market-to-Quadruple-by-2034-Reaching-a-Forecasted-226-76-billion-by-2034.html