Global Data Center Construction Market - 2022-2029

Global Data Center Construction Market - 2022-2029
Market Overview

The Data Center Construction Market reached US$ XX million in 2021 and is expected to record significant growth by reaching up to US$ XX million by 2029, growing at a CAGR of 9.80% during the forecast period (2022-2029).

Data center construction involves the physical construction of a data center facility, which essentially refers to activities involved in the designing, planning and construction.

The construction blends data center operational environment requirements with building standards. A data center is not the same as a multi-purpose or uninteresting structure. In addition to the building’s design, reliability and high quality are key to protecting the servers inside. There are several major differences to consider when creating a data center, including operations. Data centers, unlike ordinary buildings, must contain strategic cooling systems to reduce the danger of equipment damage. Data center managers require resource monitoring systems to monitor energy consumption carefully.

Construction workers must know how to make the most of the building's equipment and floor space. Data center construction focuses on designing and building a data center using key factors such as capacity, disaster tolerance and efficient design.

Market Dynamics

The rising adoption of hyper-scale data centers in large enterprises is boosting global market share for data center construction.

The rising adoption of hyper-scale data centers in large enterprises is boosting the market share for data center construction globally

Hyperscale data centers are large business-critical facilities that efficiently support robust, scalable applications. They are often related to big data-producing companies such as Facebook, Google, Amazon, IBM and Microsoft. Hyperscale data centers are substantially larger than enterprise data centers and outperform them greatly due to economies of scale and bespoke engineering. A hyperscale data center, by no means an official definition, should have more than 5,000 servers and 10,000 square feet.

In the past decade, there has been significant growth in hyperscale data centers, which has escalated the growth data center construction market. For instance, in 2020, more than 100 new hyperscale data center facilities were built, bringing the total to around 600. The number of large data centers run by hyperscale providers climbed to 597 by the end of 2020 and has more than doubled since 2015. In 2018, 430 hyperscale facilities, up from 500 in 2019.

Over half of all big data centers are owned by Amazon, Microsoft and Google and continue to be significant growth drivers. Recently, Amazon and Google opened the newest data centers, accounting for half of the 2020 additions. Oracle, Microsoft, Alibaba and Facebook were also active last year.

Hyperscale data centers are utilized in various industries to boost computing power, memory, networking infrastructure and storage capacity. The physical infrastructure and distribution systems enabling hyperscale data centers for maximum cooling efficiency and the ability to scale computing operations efficiently are among the aspects of hyperscale data centers.

Furthermore, the selling of Open Compute Project-compliant data center gear is booming. With OCP, advanced cooling solutions for fast-growing power consumption and computing density in next-generation data centers considerably contribute to the market growth with no modifications in the additional facility.

For instance, in September 2020, Digital Colony Management, LLC announced the acquisition of assets from UOL Diveo to construct the Scala Data Centers S/A (hyperscale data center platform) in Brazil. Through its company Compasso UOL, UOL Diveo will continue to provide infrastructure services through Scala and managed services, Multicloud, Security, Software Development and Digital Solutions.

The high initial investment in data center construction is hurdling the growth of the market

Data center construction has increased significantly over the past few years and has shown unprecedented growth. However, the high initial investment in data center construction has severely challenged the market share.

Land purchase, shell building and mechanical and electrical equipment are the three main components of capital expenditures during the early phase of massive data centers. The construction phase is typically between 1-2 years. The land cost covers the property's acquisition and consulting and brokerage costs. The land cost varies significantly across states, counties and cities while being the smallest component of a data center's capital expenditures.

Furthermore, Architectural planning and design, building permits, municipal taxes, land excavation and grading, highways, utility tie-ins and the building shell are all included in the base building construction expenses. Construction costs vary by place, though they are less than land prices. According to CBRE, construction costs for a Tier III 5 MW business project in costly places like Boston and Silicon Valley might be 45 percent more than construction costs in less expensive areas like Tulsa and Charlotte. According to Microsoft Corporation and Forrester Research, the cost of a base-building shell is about 16% of the initial capital expenditure and US$200 per square foot. Apart from this, a separate cost for mechanical and electrical equipment adds to the overall data center construction cost, leading to increased production costs and hence creating hurdles for market growth.

COVID-19 Impact Analysis

Overall, the COVID-19 pandemic has had little impact on the data center industry. Indeed, the crisis has prompted several carrier-neutral data center providers to upgrade their colocation facilities to provide more reliable services to a world increasingly reliant on network connectivity.

Furthermore, only in a few places has new construction been halted. In Europe, ongoing projects have been halted since worker safety is a priority. Pre-construction permitting has also been temporarily halted. In addition, construction has been reduced by at least one major hyperscale operator. For instance, after numerous workers at the site were tested for COVID-19, Facebook halted the building at its data center campus in Clonee, Ireland. Work at the company's Altoona, Iowa, campus has also been halted.

Singapore has temporarily paused development activity in Southeast Asia. Thailand allows building projects to continue with fewer working days to allow workers to return home during curfews. However, the growing vaccination drive globally is expected to regain market momentum in the forecast period.

Segment Analysis

The global data center construction market is segmented on infrastructure, data center, organization size, end-user and region.

Tier 3 category has dominated the data center construction industry is the increasing demand for high-performance computing and expanded storage capacity

The global data center construction market is segmented into tier 1, tier 2, tier 3 and tier 4. Of the mentioned Data Centers, tier 3 is expected to show the highest market share globally. Increased redundancy among data centers is responsible for the high market share. Another reason the tier 3 category has dominated the data center construction industry is the increasing demand for high-performance computing and expanded storage capacity. Tier 3 is widely used by media companies like Netflix and Facebook and banking and service industry stalwarts.

Furthermore, tier 3 facilities provide power backup and improved cooling efficiency by optimizing airflow across the architecture. It also ensures a balanced workload among servers by constantly monitoring and uniformly distributing high-intensity workloads. These incentives have prompted colocation service providers, telecom service providers, social networking behemoths and e-commerce giants to invest in tier 3 facilities.

Geographical Analysis

Increased investments in metro infrastructure in North America have created ideal conditions for data center building

U.S. has always been considered one of the forerunners in adopting new technologies. Companies in the region have started building new data centers and colocation centers to conduct their business analytics activities to prevent running out of traditional storage as Big Data analytics use grows.

Increased investments in metro infrastructure in North America have created ideal conditions for data center building. For example, CyrusOne intended to construct a 340,000 square foot mega data center with a 100MW capacity in three parts in the Dallas metro area.

Furthermore, businesses' sophisticated user needs for network and connectivity solutions that enable quicker and more reliable data connections between data centers in U.S. are continually increasing. For instance, MOX Networks, LLC and Cologix established new cooperation in 2020 to increase customer connection solutions throughout North America. MOX is currently delivering 1G, 10G and 100G capacity services to all Cologix customers, with the option to extend service to numerous Chicago area data centers and the Seattle metro area in the future.

Furthermore, North America's growing demand for Unified Communications-as-a-Service (UCaaS) solutions among telecommunication and business technology resellers help market expansion. SkySwitch, for example, offers MSPs, VARs, ISPs and interconnects white-label UCaaS from geographically varied sites to maximize system robustness.

Competitive Landscape

The global data center construction market is highly competitive with local and global key players. Key players contributing to the market's growth are Schneider Electric, Skanska, Structure Tone Organization, Turner Construction Company, DPR Construction, AECOM, Schneider Electric, M. A. Mortenson Company, Arup, Brasfield & Gorrie, L.L.C., Holder Construction Group, LLC, ISG ltd, Jacobs, ROGERS-O’BRIEN CONSTRUCTION COMPANY, LTD, The Boldt Company, Hitachi Vantara Corporation, among others.

The major companies are adopting several growth strategies such as product launches, acquisitions and collaborations, contributing to the global growth of the data center construction market.
• In June 2021, -NTT Ltd. announced the Global Data Center Interconnect (GDCI) launch. It is an integrated global network fabric service that provides private and secure connections between NTT's global data centers and major cloud service providers through a single physical port that supports multiple virtual network services. NTT's GDCI is built on advanced software-defined network technology that enables clients to connect to dense ecosystems of cloud service providers across many geographic areas, addressing hybrid and multi-cloud interconnection concerns.

Schneider Electric

Overview: Schneider Electric is a European multinational company providing energy and digital automation solutions for efficiency and sustainability. It addresses homes, buildings, data centers, infrastructure and industries by combining energy technologies, real-time automation, software and services. The company operates as a public entity and generated sales of US$ 30,509 million during the fiscal year ending December 31st, 2019.

Schneider Electric, with a successful energy-as-a-service project, offers up a model that could bring microgrid benefits to many other communities nationwide

Product Portfolio: EcoStruxure Data Center Solutions: EcoStruxure Data Center Solutions combine power, cooling, racks and management systems to enable IT equipment deployment in various scenarios, ranging from small Edge applications to huge Cloud data centers. Full critical infrastructure solutions in a single enclosure provide stability, resiliency and security to a traditional data center for various Edge situations.

Key Development
• For instance, in May 2021, Schneider Electric, growing energy management and automation player announced the new 43U to the EcoStruxure Micro Data Center C-Series, giving the company's commercial and office line of micro data centers the most capacity. The new 43U C-Series features intelligent cooling technology for improved protection and energy efficiency and it's the only solution on the market that dynamically shifts between three cooling modes according to the system's real-time needs.

Why Purchase the Report?
• Visualize the global data center construction market segmentation by infrastructure, data center, organization size, end-user and region, highlighting key commercial assets and players.
• Identify commercial opportunities in the data center construction market by analyzing trends and co-development deals.
• Excel data sheet with thousands of global data center construction market-level 4/5 segmentation points.
• PDF report with the most relevant analysis cogently put together after exhaustive qualitative interviews and in-depth market study.
• Product mapping in excel for the key product of all major market players

The global data center construction market report would provide approximately 53 market data tables, 48 figures and 215 pages.

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