Top 20 metro locations drive 56% of worldwide colocation revenues: report

New data from Synergy Research Group found that just 20 metro areas worldwide accounted for 56% of retail colocation revenues.

Driven by edge compute requirements, IoT and cloud usage, colocation facilities are taking on increased importance for cloud providers, service providers and enterprises. In addition to being the meeting place for cloud and internet-based services, colocation facilities provide low latency connections to users at the edge.

Ranked by revenue generated in the first quarter of 2019, the top five metros were Tokyo, New York, London, Washington and Shanghai, which in aggregate accounted for 25% of the worldwide market, while the next 15 largest metro markets racked up another 31% of the market, according to Synergy Research Group.

Breaking down the numbers by region, the top 20 metros included eight in North America, seven in the APAC region, four in EMEA and one in Latin America.

In the first quarter, Equinix stood tall as the retail colocation market leader by revenue in 14 of the top 20 metros, with NTT being the only other operator to lead in more than one of the top metros.

The report said that the wholesale colocation was a different mix companies and ranking of metros, but the market was even more concentrated with the top 20 metros accounting for 71% of worldwide revenue. North America featured more prominently in wholesale and accounted for eleven of the top 20 metros. Digital Realty was the leader in eight of the top 20 wholesale markets while Global Switch was tops in three others.

Other colocation operators that feature heavily in the top 20 metros include 21Vianet, @Tokyo, China Telecom, CoreSite, CyrusOne, Interxion, KDDI, SingTel and QTS.

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Synergy Research Group's latest data bore out a continuing trend. Over the last twelve quarters the top 20 metros' share of the worldwide retail colocation market has been relatively constant at around the 55-56% mark, despite a push to expand data center footprints and to build out more edge locations.

Among the top 20 metros, those with the highest retail colocation growth rates (measured in local currencies) were Sao Paulo, Sydney, Beijing, Shanghai and Frankfurt, all of which had a rolling annualized growth rate of over 15%. While the U.S. didn’t feature among the highest growth metros for retail colocation, on the wholesale side both Washington/Northern Virginia and Silicon Valley are growing at double-digit rates.

“We continue to see robust demand for colocation across the board, with the standout regional growth numbers coming from APAC and the highest segment-level growth coming from colocation services for hyperscale operators,” said John Dinsdale, a chief analyst and research director at Synergy Research Group, in a prepared statement. “It is particularly noteworthy that the market remains concentrated around the most important economic hubs, reflecting the importance of proximity to major customers.

"Hyperscale operators often focus their own large data center builds away from the major metros, in areas where real estate prices and operating costs are much lower, so they too will increasingly rely on colocation providers to help target clients in key metros. The large metros will maintain their share of the colocation market over the coming years.”