U.S. Data Center Construction Market Forecast 2023-2028

---

According to the US Data Centre Construction Market – Global Outlook and Forecast 2023-2028 the global data center construction market is expected to reach $73.43 billion in 2028 from $50.34 billion in 2022 at a CAGR of 6.50%, with the U.S. market alone expected to account for $28.56 billion of this figure. This growth, marked by a Compound Annual Growth Rate (CAGR) of 5.93% between 2022 and 2028, is propelled by factors like the rising prevalence of the Internet of Things (IoT), the advent of 5G networks, increased adoption of cloud services, and a heightened demand for high-speed online entertainment content. Key drivers in the U.S. include incentives such as tax benefits, access to free cooling, and the presence of renewable energy sources, making the region attractive to investors.

Preferred locations for data center operators include Virginia, California, Texas, Illinois, Oregon, Nevada, Georgia, Arizona, Ohio, with Virginia and Texas leading in investments in 2022, courtesy of significant contributions from major players like Amazon Web Services, Microsoft, Google, and Meta (Facebook).

However, the North-Eastern region is less likely to attract hyperscaler investments due to geographical and land constraints, leading to a focus on deploying edge data centers.

 

Forecast Highlights:

 

• Government initiatives, such as increased land availability, reduced electricity tariffs, and support for renewable energy procurement, are set to drive data center investments.
• The industry is likely to see the entry of new players, albeit facing competition from local and established global entities.
• The use of renewable energy to power facilities is expected to persist, with operators engaging in power purchase agreements with renewable energy companies.
• The trend of digitalization across businesses contributes to increased investments by colocation, cloud, Internet, and telecommunication providers.

 

Geographical Breakdown:

 

• The South-Eastern region, with North Virginia as the data center capital, boasts the highest concentration of facilities.
• Virginia, Texas, California, and Georgia emerge as top states attracting hyperscale investments, with major operators investing in large data centers.
• The North-Eastern region did not witness hyperscale development in 2022, focusing more on expansions in large-scale colocation facilities.
• Arizona State provides a range of incentives to businesses operating within the Foreign Trade Zone including a state real and personal property tax savings of up to 72.9%.

 

Segmentation Analysis:

 

• Real-time monitoring software with automation and AI capabilities gains significance for predicting maintenance needs and ensuring uninterrupted operations.
• Free cooling techniques for data center cooling purposes have experienced significant growth, especially in regions with favorable climatic conditions.
• The incorporation of modular power infrastructure is expected to result in higher operational expense (OPEX) savings, driven by increased efficiency and reduced maintenance requirements.
• Innovative designs like district heating are expected to gain traction in states with colder climates.
• The average general construction cost across the U.S. in 2022 ranged between USD 8 - USD 9 million per megawatt (MW), subject to variations based on location, commodity prices, inflation, and supply chain constraints.

 

Vendor Analysis

• Major hyperscale operators investing in the U.S. data center construction market include Amazon Web Services (AWS), Microsoft, Meta (Facebook), and Google, while major colocation operators include Equinix, Digital Realty, Switch, QTS Realty Trust, Iron Mountain, DataBank, Vantage Data Centers, CyrusOne, Compass Datacenters, among others.
• Vendors like Schneider Electric, Rittal, Hewlett Packard Enterprise, and Delta Power Solutions, providing infrastructure based on Open Compute Project (OCP) design, are poised for revenue growth.
• S. colocation providers are constructing facilities based on market demand, with an anticipated rise in demand for higher capacity systems in redundancy configurations.
• Several new entrants, such as AUBix, Corscale Data Centers, Edge Centres, iMCritical, Yondr, PowerHouse Data Centers, and Quantum Loophole, have recently joined the U.S. data center construction market.

 

 

Market Opportunities & Trends

• Implementation of Advanced UPS Batteries
• Increase in Rack Power Density
• Adoption of Liquid Immersion & Direct-To-Chip Cooling Driven by AI & HPC Applications
• Introduction of Microgrids in Data Centers
• Data Center Operators Embracing Sustainable Measures
• Growth of Edge Data Centers Due to 5G
• Innovative Technologies for Sustainable Data Centers

 

Market Growth Enablers:

• Substantial Development of Data Center Facilities
• Ongoing Investments by Hyperscale Operators in the US
• Uptick in M&A and JV Activities
• Embracing Cloud-Based Services
• Enhanced Connectivity Driving Data Center Market
• Transition from On-Premises to Cloud and Colocation
• Influence of Big Data & IoT on the Data Center Market
• Tax and Sales Incentives as Catalysts

 

Market Restraints:

• Disruptions in the Supply Chain Affecting Growth
• Shortages of Skilled Workforce and Discrimination Issues
• Challenges in Site Selection for Data Center Development
• Security Issues Impacting Data Center Growth
• Increased Power and Water Consumption by Data Centers
• Concerns Regarding Carbon Emissions from Data Centers

 

Summary

In conclusion, the thriving landscape of the data center industry presents exciting opportunities for professionals and businesses alike. As the sector experiences unprecedented growth, driven by technological advancements and a shifting digital landscape, skilled individuals find themselves at the forefront of innovation. With a focus on sustainability, advanced technologies, and strategic investments, the industry not only offers a dynamic working environment but also plays a pivotal role in shaping the digital future. As demand continues to rise, those involved in data center operations, construction, and technology deployment can anticipate a rewarding journey, contributing to the evolution of a robust and resilient digital infrastructure. The data center industry stands as a beacon for professionals seeking impactful and future-focused career paths.

 

How can we help?

With the data center industry thriving, there is an abundance of opportunities available for construction and engineering professionals looking to break into this exciting field.  If you are searching for a new opportunity in this sector or a hiring manager in need of top talent for your team, get in touch today at getus@jamesgrayrecruitment.com