Market Trends of Multi-Tenant Data Center Industry
This section covers the major market trends shaping the Multi-Tenant Data Center Market according to our research experts:
Retail colocation is Expected to Hold Significant Growth Rate
- Retail colocation is where the customer takes the space for lease within the data center, such as rack space within the caged-off area. Owing to various advantages, like ease of maintenance, smaller enterprises generally prefer retail colocation. Owning a data center is not a viable option due to the cost of land leasing. Also, maintenance of a colocation center is often not within budget constraints.
- The retail colocation market is likely driven by the high demand for colocation services from developing countries. Compared to wholesale colocation services, retail colocation services are highly suitable for enterprises requiring lesser computing power at one site or across multiple locations to service local and global customers. The retail colocation market is anticipated to witness significant growth during the forecast period.
- About 100 kW of energy is typically needed to power retail data centers, while wholesale customers usually need more than 100 kW, owing to their business scale. Many facilities, such as security provision, customer support, cooling facilities, etc., are provided by colocation suppliers. Moreover, there lies a growing need for interconnectivity, increasing the overall demand for retail colocation.
- Furthermore, the market is witnessing various key launches and investments by key players as part of its strategy to improve business and their presence to reach customers and meet their requirements for various applications. For instance, in March 2022, Carrier-neutral colocation provider Telehouse Europe opened its fifth colocation data center in London. Also, Telehouses's latest project is looking forward to refurbishing the enterprise data center space once utilized by Thompson Reuters and turning it into a major retail colocation hub powered by 100% renewable energy. Telehouse anticipates the entire 18MW project to cost GBP 223 million (USD 294 million), and its total investment in Docklands data centers is expected to reach GBP 1 billion (USD 1.32 billion) by 2025.
- The retail data center colocation market is likely driven by the increased demand for colocation services from organizations in developing countries. Also, enterprises with the need for geographically distributed capacity and limited budgets are likely to opt for retail colocation. As per Vertiv, the total industry revenues are expected to increase to over 136 billion dollars by 2028. This would possibly create immense growth opportunities for the market to grow and expand all throughout the forecast period.
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Asia-Pacific Expected to Hold Significant Growth
- The multi-tenant data center market is expected to have significant growth in the Asia-Pacific region due to the large-scale outsourcing of managed hosting services in this region. A country like China has witnessed a rise in their hyper-scale platforms, owing to which providing data center services for Chinese hyper-scale platforms has become necessary. As a result of such data generation, Japan has a high density of colocation.For instance, Digital Realty launched its first data center in Japan, named "Digital Osaka 1," indicating increased regional investment.
- Moreover, Singapore is considered one of the largest shipping ports in the world as it ensures connectivity. Singapore's government is working to make the country rich through economic growth and new ideas. As a result, the technology industry continues to invest a lot of money in Singapore.
- India is one of the fastest-growing economies in the world, and it is likely to boost the growth of public cloud-based data centers. The IT industry dominates the Indian market as the largest private sector employer in the country, where data centers are widely used, propelling market growth significantly.
- Also, the Indian market is witnessing various crucial investments and launches. For instance, in March 2022, Microsoft announced that Hyderabad, Telangana, would be the site of its latest data center area. This strategic investment aligns with Microsoft's commitment to assisting clients in thriving in an AI- and cloud-enabled digital economy.
- In India, there are currently three regions distributed over Chennai, Mumbai, and Pune for Microsoft's data centers. The data center in Hyderabad would be a new addition to this network. It would thus provide the entire Microsoft portfolio across data solutions, productivity tools, cloud, artificial intelligence (AI), and customer relationship management (CRM) with data security for businesses, educational institutions, developers, start-ups, and governmental organizations.
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