Data Center Construction Market 2022: Segmentation Analysis and Forecast to 2030
The global data center construction market size was USD 59.7 billion in 2021. It is estimated to reach USD 163.2 billion by 2030, registering a CAGR of 13.47% during 2022-2030. Datacenter construction is a complex task that requires extensive planning of electrical, location, and mechanical requirements. Moreover, the data centers carry out mission tasks. Any imperfection in power management to building design could be catastrophic and increase costs to the companies. According to the Cloud Infrastructure Report 2021, 57% of respondents said more than half of their infrastructure is in the cloud, and 64% believe they will be fully in the public cloud in the next five years.
Like the release of the General Data Protection Regulation (GDPR) act, the regulations around privacy concerns have compelled many vendors to increase data center construction within Europe. This is in line with the storage of confidential and sensitive information of European citizens locally. Furthermore, the impact of edge computing on data center construction is expected to be significant. Such disruption is fueled by a rollout of 5G and would reduce reliance on the construction of 60MW hyper-scale data centers in the future.
Global Data Center Construction Market Definition
Data center construction is the collective set of processes used to construct a data center facility physically. It combines construction standards data center operational environment requirements. Data centers are an essential component of any business, providing data storage, management, backup, recovery, big data, machine learning, productivity applications, and artificial intelligence.
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Global Data Center Construction Market Covid-19 Impact
The COVID-19 pandemic led to disruptions in the supply chain to construct data centers. The lockdowns delayed the completion of projects and caused a decline in demand from severely hit industries such as hospitality, entertainment, and construction activities. According to a recent report by the Uptime Institute on COVID-19 risks, there are supply chain disruptions and the potential for long-term shortages for critical spares and consumables. The data center operators with standardized supply chains uniformed the build processes, prefabricated components, and supplier contracts to withstand temporary disruptions.
Some major developers of wholesale data centers such as Digital Reality and Cyrus One have close relationships with vendors to pre-order equipment like generators and UPS units. They also have inventory to support 8 to 12 months of active development. Such relations help target the supply chain disruptions in the pandemic era.
Dynamics of Global Data Center Construction Market
Drivers: Growing Demand for SMAC (social, mobile, analytics, and cloud) Applications
The growing demand for social, mobile, analytics, and cloud is propelling the demand for data centers across the globe. The usage of social media platforms increased significantly over the past few years, creating the need to store data, ultimately leading to the construction of new data centers. According to the State of Social Media report 2021 by Sprout Social, consumers increased their social media use significantly (27 % ) or slightly (27 % ) compared to one year ago. 91 % of executives anticipate that their company’s social media marketing budget is expected to increase over three years. The majority expect it would increase by more than 50%. 78 % of consumers showed a willingness to buy from one brand, and 77 % would choose a brand over a competitor after a positive experience with that brand on social media. Such factors promote the growth of the data center construction market.
In addition, with the growth in 5G technology, smart cities, and industrial automation application, the adoption of smart devices is further expected to grow, leading to the generation of new data. Big data is poised to impact data center storage infrastructure. The data centers were designed to store relational data. But currently, data centers are supposed to store different data types (like: structured, unstructured and semi-structured, etc.).
Challenges: Environmental, Cost, and Workforce-Related Challenges
The major challenges affecting the market’s growth include environmental, cost, and workforce-related challenges. Data centers consume a large amount of energy, leading to stringent regulations. For instance, in January 2021, the European Commission has announced the launch of the Climate Neutral Data Centre Pact, a movement aimed at removing the data center’s environmental footprint by 2030, leading to the EU’s drive to become a climate-neutral continent by 2050.
Such stringent laws can be seen in other parts of the globe, such as China, Japan, and India. The regulations create an urgency for vendors to partner with renewable energy component providers to reach sustainable PUE. Factors such as COVID -19 and economic instability drastically affected the costs of constructing a data center. For instance, due to COVID-19, the supply chain for infrastructure has been disrupted, leading to increased costs for sourcing materials from other suppliers.
Scope of the Global Data Center Construction Market
The study categorizes the data center construction market based on infrastructure, tire type, enterprise size, and end-users at the regional and global levels.
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By Infrastructure Outlook (Sales, USD Million, 2017–2030)
- Electrical Infrastructure?
- UPS Systems?
- Other Electrical Infrastructure?
- Mechanical Infrastructure?
- Cooling Systems?
- Racks?
- Other Mechanical Infrastructure?
- General Construction
By Tire Type Outlook (Sales, USD Million, 2017–2030)
- Tier-I and II
- Tier-III
- Tier-IV
By Enterprise Size Outlook (Sales, USD Million, 2017–2030)
- Small and Medium-scale Enterprise
- Large-scale Enterprise
By End-Users Outlook (Sales, USD Million, 2017–2030)
- Banking, Financial Services, and Insurance
- IT and Telecommunications
- Government and Defense
- Healthcare
- Other End Users
By Region Outlook (Sales, USD Million, 2017–2030)
- North America (US, Canada, Mexico)
- South America (Brazil, Argentina, Colombia, Peru, Rest of Latin America)
- Europe (Germany, Italy, France, UK, Spain, Poland, Russia, Slovenia, Slovakia, Hungary, Czech Republic, Belgium, the Netherlands, Norway, Sweden, Denmark, Rest of Europe)
- Asia Pacific (China, Japan, India, South Korea, Indonesia, Malaysia, Thailand, Vietnam, Myanmar, Cambodia, the Philippines, Singapore, Australia & New Zealand, Rest of Asia Pacific)
- The Middle East & Africa (Saudi Arabia, UAE, South Africa, Northern Africa, Rest of MEA)
The general construction segment is projected to account for the largest market share by infrastructure
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The global data center construction market comprises of electrical, mechanical, and general construction based on type. In 2021, the general construction segment accounted for the largest market share of 48.4% in the global data center construction market. For multiple years, data center construction has been concentrated in a few of the key markets, such as the United States, the European regions, such as Amsterdam, London, and Dublin, as well as other locations, including Singapore, where tax incentives, robust power supply, building options, and contractors are reliable and accessible. However, this is expected to change. The demand for new construction is shifting into non-traditional markets, where there is a less clear path to securing permits, land, and power.
In terms of real estate, the most expensive market is in Europe, and much of the activity is focused on the FLPA (Frankfurt, London, Amsterdam, and Paris) markets. Further, the United States rules the data center market with the largest share of the facility hub. For instance, Northern Virginia rules as the world’s largest data center hub and have over 270 megawatts under construction. The major data center REITs, such as Digital Realty Trust, Equinix, and QTS Realty Trust, filed leases in the areas in 2020.
Asia Pacific accounts for the highest CAGR during the forecast period
Based on the regions, the global data center construction market has been segmented across North America, Asia–Pacific, Europe, South America, and the Middle East & Africa. Worldwide, Asia Pacific is projected to hold the highest CAGR of 15.5% in the global data center construction market during the forecast period. In the Asia Pacific, China has the largest market share. China has been growing in data centers with support from governmental authorities. Recently, the Chinese government issued a three-year plan (2021-2023) which calls for 200 exaflops of data center computing by 2023. The plan also demands new facilities to become more efficient, have a power usage effectiveness (PUE) of 1.3 and have a consumption of 60% by the end of 2023. The strategic plan makes it mandatory for data center construction vendors to focus on data centers with a PUE of at least 1.3 and pushes the growth of green data centers.
Additionally, India is the fastest-growing country in the Asia Pacific, with a CAGR of 16.8% during the forecast period. India’s data center construction market is booming due to the large data consumption and the data localization requirements of Indian laws. In 2019, the Indian government introduced a data protection bill in the Indian parliament, which proposes the country’s first economy-wide data localization framework. In addition, sector-specific data localization measures have been implemented in different parts of the Indian economy. For instance, the telecom sector already requires the local storage and local processing of subscriber information and prohibits
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Key Market Players
The data center construction market is mildly concentrated in nature with few numbers of global players operating in the market such as IBM Corporation, GTN Data Center, Turner Construction Co., DPR Construction Inc., Fortis Construction, Hensel Phelps Construction Co. Inc., HITT Contracting Inc., JE Dunn Construction Group Inc., MA Mortenson Company Inc., AECOM Ltd, Gilbane Building Company Inc., Clune Construction Company LP, Nabholz Corporation, NTT Global Data Centers, CyrusOne Inc., and Cap Ingelec.
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