Copyright © 2022 StrategyHelix Inc. All Rights Reserved.
Latin America Data Center Colocation Market - Outlook and Forecast 2022-2027
The Latin America data center colocation market is projected to grow at a compound annual growth rate (CAGR) of over 6% from 2022 to 2027, reaching a value of over USD 1 billion in 2027 compared to USD 850 million in 2021. The construction and operation of data centers are primarily driven by increasing customer demand, with areas for development and operation chosen based on factors such as power availability, fiber connectivity, and access to skilled labor.
Most modern data center facilities in Latin America are built to meet Tier III and Tier IV standards, ensuring high service availability. Although the region faces challenges with grid power stability, it benefits from the use of free cooling technology, which reduces power consumption by cooling systems. It is expected that the market size in terms of area will reach 1114 thousand square feet by 2027.
|No. of Pages||
USD 852 million in 2020
Colocation Service, Infrastructure, Electrical Infrastructure, Mechanical Infrastructure, Cooling Systems, General Construction, Tier Standards, and Region
|No. of Companies Mentioned||
Several factors are driving the growth of the Latin America data center colocation market. These include the increased digitalization efforts across many countries, the establishment of colocation data centers by hyperscale cloud service providers, and the growth of connectivity. Some colocation data centers are expanding their wholesale colocation offerings to meet the increasing demand from cloud service providers and government entities such as Microsoft, Oracle, IBM, Google, Huawei, AWS, and others.
The demand for computing power in data centers has significantly increased due to the rising popularity of cloud services, big data, and the Internet of Things (IoT), leading to higher rack power densities. This trend, coupled with the need for increased data bandwidth and high-performance computing, drives data center operators to invest in efficient infrastructure to ensure minimal downtime.
The COVID-19 pandemic has accelerated digital transformation initiatives across Latin America, resulting in increased demand for data center services and utilization of colocation facilities. This has further attracted investments from major cloud service providers like Google, Amazon Web Services, Microsoft, Oracle, IBM, and Tencent, who continue to fuel the demand for colocation services in the region.
Governments in Latin America are actively supporting the growth of data center construction by offering various tax benefits. The region is also witnessing significant efforts to enhance connectivity through the deployment of submarine cables. Countries such as Brazil, Chile, Colombia, Argentina, Peru, Uruguay, Venezuela, Mexico, Ecuador, and others have established submarine cable connections that link them to Europe, Africa, and the United States.
The adoption of artificial intelligence (AI) technology is prevalent across various industries in Latin America, including data centers. AI is used to automate facility maintenance and prevent operational failures. However, the implementation of AI plans and strategies is sometimes hindered by political volatility in the region.
Several telecom operators in Latin America have deployed or are trialing 5G network services. Countries like Chile and Uruguay have commercially launched 5G services, while Brazil, Colombia, Argentina, Mexico, and Peru have plans for 5G trials and commercial deployments in the forecast period. The rapid investment and deployment of 5G technology will lead to an increase in connected devices and generate a substantial amount of data. Consequently, investments in edge data centers are expected to rise across Latin American countries to support low latency and facilitate easy access to data and device-to-device communications.
The market is segmented based on various factors, including colocation service, infrastructure, electrical infrastructure, mechanical infrastructure, cooling systems, general construction, tier standards, and region.
Segmentation by Colocation Service
Segmentation by Infrastructure
Segmentation by Electrical Infrastructure
Transfer Switches & Switchgear
Power Distribution Units
Other Electrical Infrastructure
Segmentation by Mechanical Infrastructure
Other Mechanical Infrastructure
Segmentation by Cooling Systems
CRAC & CRAH Units
Cooling Towers, Condensers & Dry Coolers
Economizers & Evaporative Coolers
Other Cooling Units
Segmentation by General Construction
Core & Shell Development
Installation & Commissioning Services
Engineering & Building Design
Fire Detection & Suppression
Segmentation by Tier Standard
Segmentation by Region
Other Latin American Countries
In 2021, both local and global operators held a dominant position in the Latin America data center colocation market, primarily through their retail colocation services and construction activities. However, there is a growing presence of cloud service providers, which is expected to drive the growth of wholesale colocation in the region. Particularly, Brazil, Chile, and Mexico are experiencing an increase in demand from cloud service providers, leading to a flourishing wholesale colocation market in these countries.
One notable trend in the Latin America data center colocation market is the significant adoption of lithium-ion UPS systems. This is especially evident in the deployment of edge facilities, where single-phase lithium-ion UPS and monitored and switched PDUs are commonly utilized. The emergence of edge facilities is expected to contribute significantly to the overall market growth.
When it comes to power infrastructure, data centers are increasingly investing in redundancy measures, with a minimum of N+1 redundancy being the norm. Many facilities are equipped with N+N or 2N redundancy for power infrastructure, with even higher levels of redundancy for UPS and generator systems. Construction contractors such as AECOM, Aceco TI, Constructora Sudamericana, Fluor Corporation, Holder Construction, Jacobs Engineering Group, Quark, and ZFB Group are actively involved in building data centers across Latin America.
Recent years have witnessed significant investments pouring into the Latin America data center colocation market, with Brazil, Chile, Colombia, and Mexico leading the way. Additionally, emerging locations like Uruguay, Bolivia, Argentina, and Peru are also attracting attention. In terms of market share, Brazil secured the majority portion with approximately 58% of investments in 2021, followed by Mexico with a share of around 28%.
Mexico’s data center colocation market is predicted to experience substantial growth, with an absolute increase in area by 41% between 2022 and 2027. In 2021, Mexico accounted for around 27% of the power capacity added in the industry. Brazil remained the primary revenue generator in the market, thanks to the presence of numerous local and global data center operators such as Equinix, Ascenty, ODATA, and Scala Data Centers. The demand for colocation facilities primarily came from sectors such as telecommunications and internet service providers.
Global colocation providers have entered the competition by forming strategic partnerships with local enterprises, governments, and telecom service providers. For instance, Equinix, a leading global colocation data center operator, expanded its presence in Mexico through the acquisition of Axtel’s business.
Some prominent colocation operators in the Latin American colocation market include Ascenty, Claro, Equinix, HostDime, ODATA, Scala Data Centers, Millicom (Tigo), and other players.
Vendors are expanding their presence in Latin American countries, aiming to enhance revenue growth. This expansion is primarily driven by the increased construction of large-scale data centers in Brazil, Chile, Colombia, and Mexico.
The market is expected to witness a surge in the construction of mega data centers to meet the growing demand for wholesale colocation services from cloud service providers. This, in turn, will present revenue opportunities for infrastructure providers operating within their respective segments.
To ensure efficient cooling solutions for their facilities, many operators are adopting units from various vendors.
Several data center operators rely on local resellers and skilled experts for installation, commissioning, and maintenance services. In the market, numerous infrastructure providers offer specialized products or a comprehensive range of infrastructure solutions tailored for Latin American data centers.
The construction of data centers is experiencing significant growth, with greenfield data center development making a strong contribution to the Latin America modular data center market year on year.
Both global and local construction contractors, engineering firms, and architectural companies are present in the region. The growth in the data center market will create opportunities for local sub-contracts in the construction, engineering, and architectural sectors.
Key companies profiled in this report include ABB, Alfa Laval, Assa Abloy, Axis Communication, Bosch Security Systems (Robert Bosch), Caterpillar, Cummins, Delta Electronics, Daikin Applied (Daikin Industries), Eaton, Generac Power Systems, Honeywell International, Johnson Controls, Legrand, Mitsubishi Electric, Munters, Piller Power Systems, Panduit, Rittal, Rolls-Royce, Schneider Electric, Stulz, Siemens, Vertiv, Aecom, Aceco TI, Constructora Sudamericana, Fluor Corporation, Gensler, HDOS, Holder Construction, Jacobs Engineering Group, PQC, QUARK, ZFB Group, Zeittec.
Key Questions Answered
How large is the Latin America data center colocation market?
As of 2021, the Latin America data center colocation market is valued at USD 852 million. It is projected to experience a compound annual growth rate (CAGR) of 6.15%, eventually reaching USD 1.2 billion by 2027.
What is the growth rate of the Latin America data center colocation market?
From 2022 to 2027, the Latin America data center colocation market is anticipated to grow at a CAGR of 6.15%.
What is the value of the Latin America data center colocation market in terms of power capacity?
The Latin America data center colocation market is expected to reach a power capacity size of 220.5 MW.
Which country held the largest market share in the Latin America data center colocation market in 2021?
Brazil secured the largest market share in the Latin America data center colocation market in 2021, with investments accounting for approximately 58% of the total market share. Mexico followed with a share of around 28%.