A hyperscale is a kind of large-scale data center that offers vast computing capabilities, often in the form of an elastic cloud platform. Organizations use them to manage and deliver extensive applications and services. The objective of hyperscalers is to expand their service offerings while maintaining better latency as well as improve availability in order to cover more ground. They face intense competition from colocation providers in addition to internal competitors. 37% of the capacity of data centers is owned by colocation providers such as Digital Realty, Equinix, CyrusOne, Chindata, and Global Switch; 32% by cloud service providers and hyperscalers; 20% by privately owned data centers; and 11% by telecoms.
Moreover, for small enterprises, constructing their data center involves huge capital. Since these enterprises have a limited budget or capital expenditure to construct a data center, the ROI is comparatively low. As a result, most of these enterprises are choosing colocation or cloud services. These companies do not require much storage space, and constructing their own data center is not feasible. Therefore, they depend on colocation or CSPs to store their data. Also, apart from the capital required to build a data center, other expenses and efforts such as maintenance and service become a burden for these companies. Moreover, the demand for colocation services and hyperscalers is leading to the rise in the construction of mega data centers as they offer economies of scale. Thus, the increasing implementation of hyperscalers and colocation is anticipated to create lucrative opportunities for the data center construction market growth during the forecast period.
Europe Data Center Construction Market
The data center construction market is experiencing growth due to factors such as the strength of the European economy, the rise in demand for cloud computing, and the increased reliance on digital technologies. The market encompasses various infrastructure types and offerings, including electrical infrastructure, mechanical infrastructure, general infrastructure, solutions, and professional services. Several companies are actively involved in the data center construction market in Europe. For instance, in October 2023, Data4, a data center operator based in France, enlisted the services of Hill International to oversee the development of a new campus in San Agustín de Guadalix, Spain. The project, known as MAD2, will span across a 6.5-hectare site and encompass four data centers with a combined capacity of 80 MW. Data4 has emphasized that these new facilities will leverage their efficient and adaptable model to accommodate the growth of their customers. Moreover, in October 2023, Telehouse, an internationally recognized provider of colocation services, declared the commencement of construction for a second data center at its TH3 Paris Magny location in France. The data center will offer a substantial IT floor space measuring 12,000 square meters, along with an electrical power capacity of 18 MW. The company’s decision to expand its infrastructure in this manner aligns with its strategic objective of enhancing European and national digital independence by augmenting hosting and connectivity provisions at its existing regional facilities, thereby attracting global internet traffic to the region. Such developments are expected to boost the data center construction market growth in Europe during the forecast period.
The German data center construction market is witnessing steady growth owing to factors such as increasing data processing demands and technological advancements. Major players in the market are investing in acquisitions and expanding their data center capacity to meet the growing demand. For instance, in January 2023, CyrusOne acquired an office complex in Frankfurt, Germany, with plans to convert it into a data center campus. The facility was sold by the investment group Corum for EUR 95 million (US$ 102.3 million). Moreover, NorthC, a prominent player in the data center industry, has announced its plans to develop a state-of-the-art data center facility in Frankfurt, Germany. This marks the company’s first venture into the German market. With a planned capacity of 5 MW, the new Frankfurt facility would cater to the increasing demand for data center services in the country. Notably, Germany became the first country in Europe to introduce serious legislation relating to data centers. This highlights the country’s commitment to regulating and optimizing data center operations by addressing various aspects of data center operations, including energy efficiency, environmental impact, and security.
Segmental Overview
The data center construction market analysis has been carried out by considering the following segments: type of construction, Tier design, and industry vertical. Based on type of construction, the data center construction market is segmented into general construction, electrical construction, and mechanical construction. Based on Tier design, the data center construction market is segmented into Tier 1 and Tier 2, Tier 3, and Tier 4. Based on industry vertical, the data center construction market is segmented into IT & telecom, BFSI, government, manufacturing, retail, transportation, media & entertainment, and others.
The IT and telecommunication segment held the largest data center construction market share in 2022 and is expected to record the highest CAGR during the forecast period.
A telecommunication data center is a facility operated and owned by a telecom or service provider company such as AT&T or Verizon. As they are responsible for driving content delivery and facilitating cloud and mobile services, telecom data centers need significantly high connectivity. This specific type of data center is connected to other cloud providers, data centers, and telecom operators through outside plant (OSP) cables, with cross-connects highly adopted to ensure efficient operations. Several regions accommodate telecom data centers as a central data center and regional or edge data centers, which fuels the segment’s growth in the data center construction market. In addition, telecom data centers are accountable for managing network resources, such as 5G packet core and vRAN. The services or applications offered by most telecom data centers include IP Multimedia Subsystem (IMS), PDN and Serving Gateways, and Gi-LAN.
Market Analysis: Competitive Landscape and Key Developments
The data center construction market forecast is estimated on the basis of various secondary and primary research findings such as key company publications, association data, and databases. Rittal GmbH & Co. K.G. ; Schneider Electric SE; DPR Construction Inc; Mercury Engineering Ltd; STO Building Group Inc; AECOM; HOLDER CONSTRUCTION COMPANY; Turner Construction Co; Eaton Corp Plc; and Nikom InfraSolutions Pvt. Ltd. are among the prominent players profiled in the data center construction market report. In addition, several other players have been studied and analyzed during the study to get a holistic view of the market and its ecosystem. The market report provides detailed market insights to help major players strategize their growth. As per the company press releases, below are a few recent key developments:
• In September 2023, South Korean technology behemoth SOLIS-IDC announced its plan to invest US$ 2 billion in India to establish a cutting-edge data center. The company has selected the Global Forum for Policy and Strategy (GFPS) Advisory to facilitate negotiations and representations for this ambitious venture within the Indian market.
• In January 2024, ACS Group, through Turner Construction Company, had been selected to build a hyperscale data center campus for Meta in Jeffersonville, Indiana. This nearly 700,000-square-foot campus will have multiple data center buildings and will be part of Meta’s global infrastructure that helps bring technologies and services to life. Once completed, the Jeffersonville Data Center will represent an investment of more than US$ 800 million and support approximately 100 jobs.