The global data center construction market size was estimated to grow at a CAGR of 5.52% between 2020 to 2027, the market size was estimated at USD 60.15 billion in 2019.
Data Center Construction Trends
Edge Computing Driving the Market growth:
Growing demand for edge computing has led to a substantial increase in the construction of data centers around the world. The edge computing aims at developing a network of data centers near the user location so that the user requests can be handled in real-time and at a much faster rate, this enables a better user experience, data processing, and connectivity. Companies are building a number of small data centers throughout the world to create this seamless network of data centers that shall handle the nearby user requests easily. Therefore, edge computing has created numerous new opportunities for the data center construction market in 2019. As the smaller data centers are geographically diversified and have low investment requirements compared to the tier-1 data centers offering colocation services, the number of companies entering the edge data center construction is huge, as there is practically no entry barrier as of now.
Growing volumes of data worldwide
The lowering rates of the internet in developing countries has led to an eruption in demand for smartphones, smart TV, OTT services, and online services in the last few years. There are almost 4.5 billion internet users in the world, this gigantic rise in the number of internet users has led to a significant rise in demand for data storage centers worldwide. It is estimated that around 125 zettabytes of data shall be generated by 2025, out of which about 90.7 zettabytes will be from IoT services. Such a tremendous rise in data shall increase the demand for data to enter construction significantly over the forecast period.
The importance of cloud-based services is rising each day, companies are exploring various cloud-based solutions that shall fulfill their business needs. The movement of various online services from on-premise to cloud is also significant in recent years.
Data Center Construction — COVID-19 Impact Analysis
The Novel Coronavirus (COVID-19) outbreak at Q1 2020, resulted in the lockdown in various countries impacting severely on numerous industries & businesses. The data center construction industry is no exception to this COVID-19 impact, the supply chain in the data center construction industry is severely affected due to the COVID-19 pandemic, this shall result in a long-term delay in the data center construction projects.
The market is also anticipated to witness a shortage of skilled labor in the next few years, resulting in the upward pricing movement. However, the demand for the data center will grow substantially in the next few years, as the need for storage is growing significantly each year.
The lockdown resulted in a significant rise in subscription to online services such as Netflix, and Zoom. Netflix subscribers increased by 15 Billion from February to April 2020. The load on data center increased by approx. 15% during the lockdown, which has increased the significance of constructing newer data centers worldwide.
The supply chain for data center construction material has been impacted severely as most of the supplier companies were either closed or operating partially, resulting in several delays in the supply of materials. The new worksite safety norms such as social distancing & sanitation, shall result in an increase in project timelines & impact the productivity levels in the construction of data centers.
Data Center Construction — Segmental Analysis
Infrastructure Type Overview:
The general infrastructure segment is leading the global data center construction market with greater than 40% market share in 2019. The growth in this particular segment can be attributed to the increasing construction of mega data centers across the world. The pigment incorporates key activities such as project planning, advisory, legal permission, installation, maintenance, and permit procurement. The significant rise in concerns over data security has lead to substantial growth in demand for data center construction. Datacenter construction companies need to invest more in security technologies to ensure maximum safety and security of user data.
Electrical infrastructure plays a significant role in the development of a data center, power requirement at the data center is very high; which requires an efficient electrical system to handle the power needs. For the electrical infrastructure, the segment is expected to grow at a substantial growth rate over the forecast period.
The data center generates a large amount of heat due to continuous computational processes occurring inside the data center, the mechanical infrastructure such as a data center cooling system plays a significant role in handling the heat inside the data center thereby improving the efficiency e of individual servers. The mechanical infrastructure segment is growing at a moderate growth rate over the forecast period.
End-User Type Overview
The Global data center construction market is dominated by the IT and telecom sectors. IT and Telecom segments accounted for greater than 38 % market share in 2019. Substantial growth in the number of internet users and advancement in technology such as the internet of things (IoT), machine learning, artificial intelligence, Big Data Analytics, etc. are responsible for the exponential growth in the IT and Telecom segment. Moreover, the increasing demand for the construction of edge computing data centers, hyper-scale data centers is expected to further boost the demand for the data center construction market. The introduction of Advanced internet connectivity through 5G, is expected to result in increasing the number of internet users in the upcoming few years; which shall result in the increase in demand for the data center construction market worldwide.
The growing importance of user data security and payment security in the BFSI sector has resulted in substantially increasing demand for the data centers. The growing usage of mobile banking services and internet banking services has increased the importance of online data security, therefore the companies are looking forward to storing the customer data at a secure data center, which shall positively benefit the development of the global data center construction market.
Tier Standard Type Overview
A Tier standard classifies the data center based on the infrastructure capabilities and architecture. Tier 1 data centers are highly advanced in terms of overall infrastructure and capacity, most of the data center is present in developed countries such as the United States falls under this category. A Tier 4 data center requires huge initial investments and most of the companies face challenges in financial funding; where is the Tier 2 data center is considered as a moderate capacity data center and is highly preferred for various operations. The Tier 2 data center accounted for 30.25% market share in 2019, the segment is expected to grow at a moderate growth rate over the forecast period.
The demand for tier 3 and tier 4 data center he is growing steadily since the last few years as the number of internet users in developing countries has increased substantially in this period. The data center in developing countries such as China, India, Indonesia, Brazil falls under 2 and Tier 1 categories. Technological giants such as Google, Microsoft, and Apple are investing in developing mega data centers to capture greater share in this particular market.
The North America data center construction market was valued at USD 19.25 billion in 2019, the region is a global leader for all types of data center construction services. The us-based technological Giants such as Google, Microsoft Corporation, Apple Inc. Are investing in developing Mega data center in the United States. For instance, in February 2019, Google announced a USD 13.0 Billion investment in the development of Mega data center in the United States. The stringent government regulation related to user data security and privacy security in the European region has resulted in a significant increase in demand for data centers across Europe.
The Asia-pacific region is anticipated to emerge as the largest market for the data center construction market between 2020 to 2027. The regional growth for edge computing and increasing demand for the hyper-scale data center is expected to boost the market growth. The growing penetration of smartphones is also one of the key driving factors for APAC data center construction market growth.
Data Center Construction — Company Share Analysis
- DPR Construction
- Equinix, Inc.
- Fortis Construction
- Fluor Corporation
- Hensel Phelps
- HITT Contracting
- Holder Construction Group, LLC
- JE Dunn Construction
- STO Building Group
- H. Group, Inc.
- Turner Construction Company
- Whiting-Turner Contracting Co.