Data Center Construction Market Valuation Exceeding USD 453.5 Billion by 2033, Supported by an Impressive CAGR of 6.7%
Innovations in data center technologies, including energy-efficient cooling systems and advanced security solutions, are facilitating more sustainable and secure data center constructions.
New York, Jan. 24, 2024 (GLOBE NEWSWIRE) — According to Market.us latest industry analysis, The led in 2023, accounting for over 38% of the market. Healthcare, Government & Defense, Retail & E-commerce, Energy & Utilities, and other industries are also driving growth.
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Recent Developments
- In 2023, Skanska AB: Investments in digitalization: Implemented advanced technologies like BIM and 3D modeling for efficient data center construction.
- In 2023, Mortenson Construction: Built several large-scale data centers for major cloud providers like Amazon Web Services and Microsoft Azure.
Factors Affecting the Growth of the Global Data Center Construction Market
- Technological Advancements: The rapid evolution in technology, particularly in cloud computing, Big Data analytics, and the Internet of Things (IoT), has significantly increased the demand for data storage and processing capabilities. This has led to a surge in the construction of data centers equipped with advanced infrastructure to handle vast amounts of data efficiently.
- Increasing Data Consumption and Digital Transformation: With the digitalization of businesses and the growing reliance on online services, there is an escalated need for data storage and processing facilities. The proliferation of streaming services, remote work, e-commerce, and social media platforms contributes to this increased demand, necessitating the expansion of data center capacities.
- Governmental Policies and Regulations: Government regulations regarding data sovereignty, privacy, and security influence the data center market. Policies mandating local data storage can drive the construction of new data centers in specific regions. Additionally, compliance with international standards for data security and privacy, like the General Data Protection Regulation (GDPR) in Europe, can also impact market growth.
- Environmental Considerations: There is a growing focus on building energy-efficient and sustainable data centers due to concerns over high energy consumption and carbon footprint. This has led to the adoption of green data center technologies, use of renewable energy sources, and innovative cooling systems, which can influence construction costs and design.
- Economic Factors: The economic stability of a region can impact investment in data center construction. Regions with strong economic growth are more likely to see increased investment in data infrastructure.
- Geographical Factors: The location of a data center is crucial, as it needs to balance factors like climate (to reduce cooling costs), proximity to users (to reduce latency), risk of natural disasters, and availability of skilled labor.
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Report Segmentation of Data Center Construction Market
Type Analysis
In 2023, the Colocation Data Centers segment held a dominant market position, capturing more than a 46% share in the global data center construction market. This significant market share can be attributed to several key factors. Primarily, colocation data centers offer a cost-effective solution for businesses by enabling them to rent space for servers and other computing hardware, thereby avoiding the high capital expenditures associated with building and maintaining their own data center facilities. This model is particularly appealing to small and medium-sized enterprises (SMEs) that require robust IT infrastructure without the associated high costs.
Another factor contributing to the dominance of colocation data centers is their ability to provide scalability and flexibility. Businesses can easily scale their IT infrastructure up or down, depending on their evolving needs, without investing in physical space and infrastructure. This flexibility is vital in today’s rapidly changing technology landscape.
Furthermore, colocation data centers often provide enhanced security, connectivity, and professional management, which are crucial for businesses prioritizing data security and uptime. By outsourcing data center needs to colocation facilities, companies benefit from advanced security measures, including physical security, cybersecurity protocols, and redundancy systems, ensuring minimal downtime and data loss.
Tier Type Analysis
In 2023, the Tier III segment held a dominant market position in the data center construction market, capturing more than a 41% share. This notable dominance can be attributed to the balanced blend of cost-efficiency and reliability that Tier III data centers offer. Unlike Tier I and Tier II facilities, Tier III data centers provide a significant upgrade in terms of uptime and redundancy. They are designed to ensure that any component can be replaced or maintained without disrupting operations, making them highly attractive for businesses that require high availability but must also manage costs effectively.
Further driving the growth of the Tier III segment is the increasing adoption of cloud services and big data analytics by small and medium-sized enterprises (SMEs). These enterprises are typically looking for data centers that offer a higher level of reliability than Tier II, but do not require the extremely high levels of fault tolerance found in Tier IV. The moderate investment and operational costs associated with Tier III data centers make them a pragmatic and popular choice in the rapidly evolving digital landscape, where downtime can result in significant financial and reputational losses.
End-User Industry
In 2023, the IT & Telecom segment held a dominant market position in the data center construction market, capturing more than a 38% share. This substantial market share can be primarily attributed to the escalating demand for data processing and storage solutions driven by the proliferation of digital communication and the expansion of telecommunications infrastructure globally. The IT & Telecom industry, being at the forefront of digital transformation, necessitates robust, scalable, and secure data centers to manage the vast volumes of data generated and to support the increasing reliance on cloud computing and IoT (Internet of Things) technologies.
The surge in mobile data traffic, the rollout of 5G networks, and the growing adoption of smart devices have further intensified the need for advanced data center infrastructures in this sector. These data centers are integral to ensuring seamless connectivity, high-speed data transmission, and uninterrupted service delivery, which are critical in the IT & Telecom industry. Furthermore, the adoption of big data analytics, AI (Artificial Intelligence), and machine learning applications in telecommunications operations is driving the demand for more sophisticated data processing capabilities, which in turn fuels the growth of the data center construction market in this segment.
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Competitive Landscape
The competitive landscape of the market has also been examined in this report. Some of the major players include:
- Turner Construction Company
- Holder Construction Group
- DPR Construction
- Skanska AB
- Mortenson Construction
- AECOM
- Jacobs Engineering Group
- M. A. Mortenson Company
- Hensel Phelps Construction Co.
- Holder Construction Company
- Other Key Players
Scope of the Report
| Report Attributes | Details |
| Market Value (2023) | US$ 237.1 Billion |
| Forecast Revenue 2033 | US$ 453.5 Billion |
| CAGR (2024 to 2033) | 6.7% |
| North America Revenue Share | 38% |
| Base Year | 2023 |
| Historic Period | 2018 to 2022 |
| Forecast Year | 2024 to 2033 |
Key Market Segments
Type
- Enterprise Data Centers
- Colocation Data Centers
- Hyperscale Data Centers
Tier Type
- Tier I
- Tier II
- Tier III
- Tier IV
End-User Industry
- IT & Telecom
- Healthcare
- Government & Defense
- Retail & E-commerce
- Energy & Utilities
- Other End-User Industries
Impactful Driver
The most impactful driver in the data center construction market is the escalating demand for cloud services. This surge is primarily due to the increasing reliance of businesses on cloud computing for data storage, management, and processing. As enterprises continue to adopt cloud-based solutions for scalability, flexibility, and cost-efficiency, the need for robust data center infrastructure becomes critical. This shift is further accelerated by the rapid growth of data generated from various digital platforms, Internet of Things (IoT) devices, and big data analytics, necessitating significant expansion in data center capacities.
Key Trend
A key trend in the data center construction market is the growing emphasis on sustainable and energy-efficient data center designs. With rising concerns about the environmental impact of data centers, which are significant consumers of electricity and resources, there is a notable shift towards green data centers. These facilities are designed to minimize energy consumption and reduce carbon footprints, utilizing renewable energy sources, advanced cooling systems, and energy-efficient building materials. This trend is not only environmentally responsible but also cost-effective in the long run, as it leads to lower operational expenses.
Major Challenges
One of the major challenges facing the data center construction market is the increasing complexity and cost of building state-of-the-art data centers. The need for advanced security measures, high-speed connectivity, and scalable infrastructure adds to the complexity of data center construction. Additionally, adhering to various regulatory compliances and data protection laws, especially in regions with strict data sovereignty requirements, poses significant challenges.
Another notable challenge is the limited availability of skilled professionals in the field of data center construction and management. This skill gap can lead to project delays and increased costs. Furthermore, the rising prices of raw materials and land, along with the logistical challenges associated with sourcing and transporting these materials, especially in less accessible regions, also present considerable hurdles in the development of new data center facilities.
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Regional Analysis
In 2023, North America held a dominant market position in the data center construction market, capturing more than a 38% share. This prominence can be attributed to the region’s advanced technological infrastructure, high concentration of global technology companies, and significant investments in cloud services and big data analytics. The United States and Canada, as leading economies in North America, have witnessed a surge in the construction of hyper-scale data centers, driven by the escalating demand for cloud-based services and the proliferation of Internet of Things (IoT) technologies.
Transitioning to Europe, the region has exhibited robust growth in data center construction, propelled by the increasing adoption of digital transformation strategies across various industries. European countries, notably Germany, the United Kingdom, and France, are focusing on enhancing their digital infrastructure to support cloud computing, artificial intelligence, and machine learning applications. The European data center market is also influenced by stringent data protection regulations, which have led to a rise in local data storage solutions.
By Geography
- North America
- The US
- Canada
- Europe
- Germany
- France
- The UK
- Spain
- Italy
- Russia
- Netherland
- Rest of Europe
- APAC
- China
- Japan
- South Korea
- India
- Australia
- New Zealand
- Singapore
- Thailand
- Vietnam
- Rest of APAC
- Latin America
- Brazil
- Mexico
- Rest of Latin America
- Middle East & Africa
- South Africa
- Saudi Arabia
- UAE
- Rest of MEA
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