April 24, 2024
Data Center Construction Market

The Data Center Construction Market is transforming digital infrastructure by 2030

The data center construction market involves the development of facilities that house computer systems and associated components, such as telecommunications and storage systems. These construction facilities help in connecting the world by enabling seamless data transfer, storage and access to information across various clouds and networks. With rapid digital transformation across industries, the need for centralized data processing and storage is growing significantly. This is driving increased investments in building advanced data centers with robust and resilient infrastructure.

The Global Data Center Construction Market is estimated to be valued at US$ 72099.62 Mn in 2024 and is expected to exhibit a CAGR of 6.4% over the forecast period 2024 to 2030.

Reliable and secure data centers have become essential for supporting the massive data footprints generated through technologies such as IoT, 5G, cloud computing and artificial intelligence. Their construction requires extensive use of electrical and mechanical engineering expertise for delivering reliable power, cooling and physical security on a large scale.

Key Takeaways

Key players operating in the data center construction are Regeneron Pharmaceuticals, Inc., Alimera Sciences, Oxurion NV., Abbvie Inc. and F. Hoffmann-La Roche Ltd. These major players are focusing on partnerships and acquisitions to expand their presence and drive the market growth. For instance, Regeneron Pharmaceuticals, Inc. recently acquired Sanofi’s stake in their immuno-oncology assets to accelerate their research.

The rapid digital transformation across industries is fueling exponential growth in data. This is driving increased demand for advanced centralized data management infrastructure with large storage capacity. Hyperscalers are significantly scaling up their investments in building new data center parks and campuses globally.

Leading cloud and technology companies are aggressively expanding their global footprints by constructing new data center facilities across major markets. For example, Abbott Laboratories’ established a new data center in India to drive their digital initiatives in the region. This is expected to boost the construction activity in international markets over the forecast period.

Market key trends

One of the key trends in the Data Center Construction Market Demand is increasing build outs of mega and hyperscale facilities. This involves constructing large campuses spanning hundreds of acres with capacity to house hundreds of thousands of servers. Hyperscalers like AWS, Microsoft and Google are leading this trend to develop facilities powering their public clouds. Another trend is increasing construction of edge data centers in proximity to population centers. This helps enhance connectivity and supports applications requiring low latency such as autonomous vehicles and telehealth. Sustainability practices in design and operations is also a major trend with focus on reduced carbon footprint, renewable energy use, waste recycling and water conservation.

Porter’s Analysis

Threat of new entrants:

Construction of data centers requires large capital investments and requires support from various facility management teams, acting as a barrier for new companies.

Bargaining power of buyers: Large technology companies and cloud service providers have significant bargaining power over construction companies as they can choose from multiple construction contractors.

Bargaining power of suppliers: Construction material suppliers have moderate bargaining power due to the dependence of construction firms on raw materials like cement and steel. However, availability of substitutes limits their power.

Threat of new substitutes:

There is a low threat of substitute infrastructure that can replace data center facilities. Data centers offer synergies for cloud, network and storage that are difficult to replicate.

Competitive rivalry: The data center construction industry is highly fragmented with the presence of global as well as regional contractors. Competitive pressure arises from differing contractor capabilities, pricing, and relationships with owners.

The United States accounts for the largest share of the global data center construction market in terms of value. This is attributed to high construction of hyperscale data centers by cloud providers and technology companies. The growing necessity for data storage, computing and networking infrastructure amongst enterprises in the US has proliferated data center development.

The Asia Pacific region is likely to witness the fastest growth during the forecast period. This is owing to growing digitalization, lower construction costs and supportive government initiatives in countries like India and China. Rapid expansion of cloud, IoT and big data services has necessitated construction of localized data center facilities across the Asian region.

1. Source: Coherent Market Insights, Public sources, Desk research
2. We have leveraged AI tools to mine information and compile it