U.S. Data Center Construction Market - Industry Outlook & Forecast 2024-2029

U.S. Data Center Construction Market - Industry Outlook & Forecast 2024-2029

The U.S. data center construction market by investment is expected to grow at a CAGR of 11.69% from 2023-2029.

KEY HIGHLIGHTS

• The U.S. data center construction market is booming due to demand from hyperscale companies, Artificial Intelligence (AI) needs, and the growth of edge computing. To keep up with AI demands, data center operators adjust their infrastructure and develop innovative cooling and energy efficiency solutions to meet sustainability targets.
• Supply chain disruptions, increasing inflation rates, a shortage of skilled workers, and power restraints are estimated to impact the U.S. data center construction market negatively.
• High demand for data center capacity was fueled by hyperscale companies, financial institutions, healthcare organizations, and various major corporations, accounting for an unprecedented power capacity volume in the market.
• The U.S. government will promote data center investments through various initiatives such as increasing the availability of land for development, reducing electricity tariffs, offering sales and tax incentives, and enabling the procurement of renewable energy. Such initiatives will drive the growth of the U.S. data center construction market during the forecast period.
• Digitalization across businesses will contribute to a surge in data center investments by colocation, cloud, internet, and telecommunication providers. Telecom companies, such as AT&T, T-Mobile, CenturyLink, and Qualcomm, are responsible for deploying and introducing 5G services in the U.S.
• The Texas data center market is becoming competitive. It is witnessing the entry of several colocation and hyperscale operators developing data center facilities in the state.
• The U.S. market is among the costliest for developing a data center facility. The average cost ranges between USD 10 million and USD 11 million per MW, and it is likely to increase by 5%—7% yearly.
• The core submarkets are witnessing land and power constraints, limiting the opportunities for new companies to enter the market. However, several new submarkets, including Aurora and Elk Grove Village, are preferred.

SEGMENTATION INSIGHTS

• Modular power infrastructure in data centers is expected to result in cost savings over time. These systems are more efficient, leading to space savings and the need for less maintenance.
• The major power supply companies, such as Dominion Energy and NOVEC (Northern Virginia Electric Cooperative), are meeting the growing power demand for data centers in North Virginia. Due to the rising construction of data centers, these power companies have recommended developing their own substations to power their data center campuses.
• Due to its sustainability, HVO fuel as a substitute for diesel fuel in generators is expected to increase in the U.S. data center construction market. Several operators are replacing diesel with HVO fuel to power their backup generators.
• Real-time monitoring software with automation and AI features is becoming increasingly significant. This technology can predict maintenance needs, identify component failures, and perform automatic switchovers to ensure uninterrupted operations.
• Several new and innovative power and cooling systems have been introduced in the U.S. data center construction market, focusing on sustainability. Infrastructure providers are focusing more on developing products with reduced environmental impact.
• Cooling techniques such as evaporative coolers are rising in regions with favorable climates to effectively cool data centers.
• In addition to building and setting up data centers, the company focuses on enhancing physical security and monitoring and managing facilities using a real-time Data Center Infrastructure Management (DCIM) system.

GEOGRAPHICAL ANALYSIS

• North Virginia is considered the world's data center capital, accounting for the highest concentration of data center facilities. The market has the presence of all the major colocation and hyperscale data center operators.
• Loudoun County, one of the major locations in Northern Virginia, is considered for the development of data center facilities. Other emerging locations include Prince William County, Culpeper County, and Fairfax County.
• Texas is considered the second-largest data center market in the US. It comprises several major locations, such as Dallas, Austin, Irving, San Antonio, and Houston. Also, the major colocation and hyperscale operators prefer the market due to strong connectivity, renewable energy options, and tax incentives. The market has several foreign trade zones (FTZs), special economic zones (SEZs), and industrial parks that offer incentives and tax reliefs.
• California, often referred to as Silicon Valley, comprises several cities such as Santa Clara, San Jose, Los Angeles, San Francisco, and Sacramento. It is among the top three data center markets in the United States. Further, the California data center market has historically grown much slower than other primary markets, such as Virginia and Texas, due to constrained power supply and the difficulty of acquiring land and sites for data center development. The trend is expected to continue during the forecast period.
• Arizona is among the most active and dynamic markets regarding hyperscale demand and development. The state has the presence of Phoenix, Mesa, Goodyear, and Chandler, which are witnessing several data center development activities. Further, Phoenix is the top market in Arizona and is considered an alternative location to California due to higher development costs, power availability challenges, and higher disaster risk in California. Hyperscale activity is increasing and is poised to grow more during the forecast period.
• Illinois has become a hub for data centers in the last three to four years, with the major locations including Chicago, Elk Grove Village, DeKalb, and Aurora. Also, Chicago is among the most populous cities in the U.S.; it benefits from its size, strategic location, and the demand from Cloud Service Providers (CSP). The Chicago market is experiencing sustained demand due to the rising interest from the major hyperscale and cloud operators that prefer proximity to end users.
• Georgia is attracting investments from hyperscale data center operators such as Microsoft and Meta (Facebook). Atlanta is among the preferred locations, followed by Lithia Springs and Douglasville.
• Historically, Atlanta was considered a Tier II data center market; this scenario has changed in the last two to three years. The market has witnessed a surge in leasing activity and accounts for several future construction projects owing to the availability of land and power to attract data center operators.
• The Oregon data center market is registering the fastest growth. The state has emerged as a future hot spot for hyperscale data center development. The market is in several locations, such as Portland and Hillsboro. Also, the factors attracting data center investments include abundant power, a favorable cost environment, business-friendly tax policies, and favorable climatic conditions to keep the servers cool using free cooling.
• Southeastern U.S.
• Virginia
• Georgia
• Tennessee
• Florida
• Alabama
• Other States
• Midwestern U.S.
• Ohio
• Illinois
• Nebraska
• Missouri
• Iowa
• Other States
• Southwestern U.S.
• Texas
• Arizona
• Other States
• Western U.S.
• California
• Nevada
• Utah
• Oregon
• Other States
• Northeastern U.S.
• New Jersey
• Pennsylvania
• New York
• Connecticut
• Other States

VENDOR LANDSCAPE

• The rising demand for data centers nationwide will provide significant opportunities for construction contractors to generate revenue. Some well-known construction contractors in the U.S. data center construction market include AECOM, Arup, Jacobs Turner Construction, DPR Construction, Holder Construction, and Cargan.
• The U.S. data center construction market includes all the major global colocation operators, including Equinix, Digital Realty, QTS Realty Trust, CyrusOne, Aligned Data Center, DataBank, Iron Mountain, Vantage Data Centers, NTT DATA, and STACK Infrastructure.
• The major hyperscale operators investing in the U.S. data center construction market include Amazon Web Services (AWS), Microsoft, Meta (Facebook), and Google. They are expanding their presence across all the top data center destinations in the US.

Key Data Center Support Infrastructure Providers

• ABB
• Caterpillar
• Cummins
• Delta Electronics
• Eaton
• Legrand
• Rolls-Royce
• Schneider Electric
• STULZ
• Vertiv

Key Data Center Contractors

• AECOM
• Arup
• Corgan
• DPR Construction
• Fortis Construction
• Holder Construction
• Jacobs
• Rogers-O’Brien Construction
• Syska Hennessy Group
• Turner Construction

Key Data Center Investors

• Apple
• Amazon Web Services (AWS)
• CyrusOne
• DataBank
• Digital Realty
• Equinix
• Google
• Meta (Facebook)
• Microsoft
• NTT DATA

Other Data Center Support Infrastructure Providers

• Airedale
• Alfa Laval
• Asetek
• Bloom Energy
• Carrier
• Condair
• Cormant
• Cyber Power Systems
• Enlogic
• FNT Software
• Generac Power Systems
• Green Revolution Cooling (GRC)
• HITEC Power Protection
• Johnson Controls
• KOHLER
• KyotoCooling
• Mitsubishi Electric
• Natron Energy
• NetZoom
• Nlyte Software
• Rittal
• Siemens
• Trane (Ingersoll Rand)
• Tripp Lite
• Yanmar (HIMOINSA)
• ZincFive

Other Data Center Contractors

• AlfaTech
• BlueScope Construction
• Brasfield & Gorrie
• CallisonRTKL
• Clark Construction Group
• Climatec
• Clune Construction
• EMCOR Group
• EYP MCF
• Fitzpatrick Architects
• Fluor Corporation
• Gensler
• Gilbane Building Company
• HDR
• HITT Contracting
• Hoffman Construction
• JE Dunn Construction
• JHET Architects
• kW Engineering
• WSP (kW Mission Critical Engineering)
• Linesight
• M+W Group (Exyte)
• Morrison Hershfield
• Mortenson
• Rosendin
• Salute Mission Critical
• Sheehan Nagle Hartray Architects
• Skanska
• Southland Industries
• Sturgeon Electric Company
• Structure Tone
• The Mulhern Group
• The Walsh Group
• The Weitz Company
• TRINITY Group Construction

Other Data Center Investors

• Aligned Data Centers
• American Tower
• AUBix
• CloudHQ
• Cologix
• Compass Datacenters
• COPT Data Center Solutions
• CoreSite
• DartPoints
• DC BLOX
• Edge Centres
• EdgeConneX
• EdgePresence
• EdgeCore Digital Infrastructure
• Element Critical
• Evoque
• Flexential
• fifteenfortyseven Critical Systems Realty (1547)
• H5 Data Centers
• HostDime
• Iron Mountain
• Netrality Data Centers
• Novva Data Centers
• PowerHouse Data Centers
• Prime Data Centers
• QTS Realty Trust
• Sabey Data Centers
• Skybox Datacenters
• Stream Data Centers
• STACK Infrastructure
• Switch
• T5 Data Centers
• TierPoint
• Vantage Data Centers
• Vapor IO
• Yondr
• 365 Data Centers

New Entrants

• Corscale Data Centers
• Crane Data Centers
• Edged Energy
• NE Edge
• Quantum Loophole
• Rowan Digital Infrastructure

KEY QUESTIONS ANSWERED:

1. What are the key trends in the U.S. data center construction market?

2. What is the growth rate of the U.S. data center construction market?

3. How big is the U.S. data center construction market?

4. What is the estimated market size in terms of area in the U.S. data center construction market by 2029?

5. How many MW of power capacity is expected to reach the U.S. data center construction market by 2029?