Global Data Center Construction Market By Type (Enterprise Data Centers, Colocation Data Centers, Hyperscale Data Centers), By Tier Type (Tier I, Tier II, Tier III, Tier IV), By End-User Industry (IT & Telecom, Healthcare, Government & Defense, Retail & E-commerce, Energy & Utilities, Other End-User Industries), By Region and Companies - Industry Segment Outlook, Market Assessment, Competition Scenario, Trends and Forecast 2024-2033
- Published date: Jan. 2024
- Report ID: 15340
- Number of Pages: 218
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Report Overview
The global data center construction market size is projected to reach a valuation of USD 453.5 Billion by 2033 at a CAGR of 6.7%, from USD 237.1 Billion in 2023.
Data center construction refers to the planning, design, and building of facilities to house computer systems, servers, and associated components for data storage and processing. It involves expertise across real estate, electrical systems, mechanical engineering, security and more to create specialized buildings tailored for housing mission-critical IT infrastructure.
The data center construction market covers products and services for building new data centers and expanding or upgrading existing facilities. It includes providers of engineering, project management, design, modular data centers, cooling solutions, physical security, monitoring tools and power systems.
Key Takeaways
- Market Size and Growth: The global data center construction market is projected to reach a valuation of USD 453.5 Billion by 2033, with a Compound Annual Growth Rate (CAGR) of 6.7%. This growth is substantial, considering it was USD 237.1 Billion in 2023.
- Definition: Data center construction involves planning, designing, and building facilities for data storage and processing. It encompasses various expertise areas, including real estate, electrical systems, mechanical engineering, and security.
- Type Analysis: In 2023, Colocation Data Centers held a dominant market share of over 46%. Enterprise Data Centers and Hyperscale Data Centers also play significant roles in the market.
- Tier Type Analysis: Tier III data centers captured more than 41% of the market in 2023, offering a balance of affordability and reliability. Tier I, Tier II, and Tier IV data centers serve specific market needs.
- End-User Industries: The IT & Telecom sector 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.
- Driving Factors: Key drivers include increasing internet usage, high adoption of cloud computing, rising investment in hyperscale data centers, and growing demand for data storage, driven by applications like AI and banking.
- Restraining Factors: Challenges include environmental impacts (energy consumption and carbon emissions), cost-related issues, workforce shortages, and regulatory compliance.
- Growth Opportunities: Emerging technologies, global market expansion (especially in Asia Pacific), increasing demand for IT and telecom data centers, and the need for large-scale data centers present growth opportunities.
- Regional Analysis: In 2023, North America dominated with over 38% market share, followed by Europe, Asia-Pacific, Latin America, and the Middle East & Africa.
- Key Players: Major players in data center construction include Turner Construction Company, Holder Construction Group, DPR Construction, Skanska AB, Mortenson Construction, AECOM, Jacobs Engineering Group, and others.
Type Analysis
In 2023, the Colocation Data Centers segment held a dominant market position, capturing more than a 46% share. This segment’s strong standing is due to businesses increasingly preferring to rent server space and infrastructure to reduce costs and increase scalability. Colocation centers offer the benefits of large-scale data facilities, such as advanced security, bandwidth, and power, without the associated capital expenditure.
Enterprise Data Centers follow, with a substantial share of the market. These are typically built and used by a single organization for its own data and IT needs. While the trend is shifting towards cloud and colocation services, many large corporations still rely on enterprise data centers for security, control, and the handling of large amounts of proprietary data.
The Hyperscale Data Centers segment, though smaller, is growing rapidly. These centers support extensive and scalable applications and are typically used by major players in tech and cloud services. The growth in cloud computing, big data, and e-commerce is driving the demand for hyperscale facilities. Their ability to provide massive scale computing and storage, coupled with energy efficiency, makes them increasingly popular as the data and computing needs of the world grow exponentially. As businesses and consumers generate and rely on vast amounts of data, the importance and growth of hyperscale data centers are expected to rise significantly.
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. Tier III data centers are popular because they offer a balanced blend of affordability and reliability. With features like dual-powered equipment and multiple uplinks, they ensure less downtime and are suitable for businesses requiring high availability without the extensive costs of the most advanced facilities.
Tier I and Tier II data centers, while less prevalent, serve specific market needs. Tier I provides the most basic infrastructure, with a single path for power and cooling and no redundant components, making it the most cost-effective but least reliable option. This suits small businesses or those with minimal IT requirements. Tier II adds some redundant components, offering improved reliability over Tier I, making it a middle ground for companies looking for a bit more assurance but still on a tight budget.
Tier IV data centers are the most advanced and secure, featuring fully fault-tolerant components with redundancy and dual-powered cooling, storage, and networking links. While they represent a smaller market share due to their higher construction and operational costs, they are crucial for mission-critical operations that require 99.995% uptime. Financial institutions, large enterprises, and cloud service providers often rely on Tier IV centers for their most sensitive and essential operations.
As businesses increasingly depend on data and IT infrastructure, the demand across all tiers of data centers is set to grow, each serving unique market needs based on the balance of cost, reliability, and operational requirements. The choice among Tier I, II, III, and IV will continue to depend on the specific business needs, size, and criticality of the IT operations they support.
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 sector’s significant demand stems from the massive amounts of data generated and processed, requiring robust and scalable data center solutions. As we move further into the digital age, the reliance on data centers for cloud computing, data storage, and telecommunications services continues to drive substantial growth in this segment.
The Healthcare sector is also making notable strides, increasingly turning to data centers to manage the vast data from patient records, telemedicine, and medical research. As healthcare technology evolves, including the rise of AI and machine learning for diagnostics and treatment planning, the demand for secure and powerful computing is rising.
Government & Defense is another critical sector, relying heavily on data centers for secure, reliable information storage and processing. With the growing need for cybersecurity and robust IT infrastructure to handle sensitive data and national security operations, this segment is seeing significant investment in data center construction.
The Retail & E-commerce sector is undergoing a digital transformation, with data centers playing a key role in handling the surge in online transactions, customer data, and inventory management systems. The growth of online shopping and the need for efficient, secure, and fast IT infrastructure to support this are driving investments in this area.
Energy & Utilities are also turning to data centers to manage and analyze data from a range of sources, including smart grids and renewable energy sources. As the sector moves towards more sustainable and efficient operations, the role of data centers in managing this transition is becoming increasingly important.
Other End-User Industries, including education, entertainment, and manufacturing, are also contributing to the growth of the data center construction market. Each sector has unique needs, driving the demand for data centers that offer a range of services, from basic storage and computing to advanced analytics and real-time processing.
Driving Factors
- Increasing Internet Usage: The growing demand for data storage and processing capabilities, driven by increasing internet usage, is a key factor fueling the growth of the data center construction market.
- High Adoption of Cloud Computing: The widespread adoption of cloud computing services is a significant driver of the data center construction market, as it necessitates the development of data center infrastructure to support cloud services.
- Rising Investment in Hyperscale Data Centers: The rising investment in hyperscale data centers, which are designed to support cloud computing and big data, is a driving factor for the construction of data centers to meet the increasing demand for these facilities.
- Growing Demand for Data Storage: The increasing demand for data storage, driven by various applications such as artificial intelligence, edge computing, and the banking and financial sector, is a key driver of the data center construction market.
Restraining Factors
- Environmental Challenges: Environmental impacts, including energy consumption and carbon emissions, pose significant challenges and restraints to the global data center construction market.
- Cost-Related Challenges: Cost-related challenges, including the high cost of construction, IT infrastructure, and power distribution, can restrain the growth of the data center construction market, impacting investment decisions and profitability.
- Workforce-Related Challenges: Workforce-related challenges, such as skilled labor shortages and workforce safety, can pose restraints to the construction of data centers, impacting project timelines and quality of work.
- Regulatory Compliance: Regulatory compliance and adherence to standards related to data center construction, energy efficiency, and environmental impact can pose challenges and restraints to market growth.
Growth Opportunities
- Emerging Technologies Adoption: The growing preference for adopting emerging technologies, such as artificial intelligence and edge computing, presents significant growth opportunities for the data center construction market, driving the need for advanced infrastructure.
- Global Market Expansion: The global expansion of the data center construction market, with the Asia Pacific region exhibiting the highest growth rate, presents substantial growth opportunities for market players.
- Increasing Demand for IT and Telecommunications Data Centers: The increasing demand for data centers from the IT and telecommunications sector presents growth opportunities for construction firms, driven by the need for robust infrastructure to support digital services.
- Rising Demand for Large-Scale Data Centers: The growing demand for large-scale data centers from various end-user industries, including banking, financial services, and healthcare, presents significant growth opportunities for the data center construction market.
Challenges
- Environmental Impacts and Sustainability: The wide-reaching environmental impacts of data center construction, including energy consumption and carbon emissions, pose significant challenges to the market, requiring sustainable and energy-efficient solutions.
- Cost-Related Challenges: The high cost of construction, IT infrastructure, and power distribution poses challenges to market players, impacting investment decisions and the overall profitability of data center construction projects.
- Workforce Shortages and Safety: Workforce-related challenges, such as skilled labor shortages and safety concerns, pose obstacles to the construction of data centers, impacting project timelines and the quality of work.
- Regulatory Compliance and Standards: Adherence to regulatory compliance and standards related to data center construction, energy efficiency, and environmental impact poses challenges to market players, requiring continuous adaptation and investment in compliance efforts.
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
Regional Analysis
In 2023, North America held a dominant market position in the Data Center Construction Market, capturing more than a 38% share. The region’s lead is attributed to its advanced technological infrastructure, high density of data-intensive industries, and robust investment in cloud services. The demand for Data Center Construction in North America was valued at US$ 90.2 billion in 2023 and is anticipated to grow significantly in the forecast period.
The presence of major tech companies and a culture of innovation drive continuous demand for new and upgraded data centers, making North America a hub for state-of-the-art data center constructions. Europe follows as a significant player with its strong focus on data security, regulatory compliance, and sustainable practices. The region’s emphasis on green technologies and energy-efficient data center designs is shaping a unique market landscape. Initiatives to reduce carbon footprints and the presence of numerous international businesses necessitating reliable data storage and processing facilities contribute to the ongoing demand in this region.
The Asia-Pacific (APAC) region is experiencing the fastest growth, driven by its expanding digital economy, increasing mobile and internet penetration, and growing IT & Telecom sector. Emerging economies like China and India are witnessing a surge in data center requirements due to rapid urbanization, digitalization of services, and a burgeoning online consumer base. The region’s focus on becoming a global data hub presents vast opportunities for market expansion.
Latin America’s market is growing steadily with increased digital transformation efforts across various industries. Improving telecom infrastructure, rising tech-savvy populations, and growing adoption of cloud-based solutions are key factors propelling the demand for data center constructions in this region. As businesses in Latin America continue to embrace digitalization, the need for secure and reliable data storage solutions is expected to rise.
The Middle East and Africa (MEA) are emerging as significant markets with increasing investments in IT infrastructure, particularly in countries like the UAE and Saudi Arabia. Initiatives to diversify economies and create smart cities are driving the construction of modern data centers. Although the current market share might be smaller compared to other regions, the potential for growth is substantial due to the increasing internet penetration and the push towards digital economies in many African and Middle Eastern countries.
Key Regions and Countries Covered in this Report:
- 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 and Africa
- South Africa
- Saudi Arabia
- UAE
- Rest of MEA
The data center construction market is highly competitive and consists of several key players that specialize in designing, building, and equipping data center facilities. These players offer a wide range of services, including project management, architectural design, electrical and mechanical engineering, and construction expertise.
Top Key Players
- 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
Recent Developments
- In May 2023, NTT Communication unveiled its intention to invest USD 59 billion in data centers, Artificial Intelligence (AI), and other burgeoning sectors over the next five years.
- In 2023, Turner Construction Company: Developed “GreenOps” program for sustainable data center construction, including energy-efficient designs and recycled materials.
- In 2023, Holder Construction Group: Launched “Sustainable Data Center Design Solution”: This solution offers advanced energy-efficient and environmentally friendly construction techniques to minimize data center footprints.
- 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.
Report Scope
Report Features Description Market Value (2023) US$ 237.1 Bn Forecast Revenue (2033) US$ 453.5 Bn CAGR (2024-2033) 6.7% Base Year for Estimation 2023 Historic Period 2018-2022 Forecast Period 2024-2033 Report Coverage Revenue Forecast, Market Dynamics, COVID-19 Impact, Competitive Landscape, Recent Developments Segments Covered By Type (Enterprise Data Centers, Colocation Data Centers, Hyperscale Data Centers), By Tier Type (Tier I, Tier II, Tier III, Tier IV), By End-User Industry (IT & Telecom, Healthcare, Government & Defense, Retail & E-commerce, Energy & Utilities, Other End-User Industries) Regional Analysis North America – The U.S. & Canada; Europe – Germany, France, The UK, Spain, Italy, Russia, Netherlands & 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 Competitive Landscape 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 Customization Scope Customization for segments, region/country-level will be provided. Moreover, additional customization can be done based on the requirements. Purchase Options We have three licenses to opt for: Single User License, Multi-User License (Up to 5 Users), Corporate Use License (Unlimited User and Printable PDF) Frequently Asked Questions (FAQ)
What is the data center construction market?The data center construction market involves the planning, design, and physical construction of data center facilities to meet the growing demand for data storage, processing, and management.
How big is the global data center construction market?The global data center construction market size is projected to reach a valuation of USD 453.5 Billion by 2033 at a CAGR of 6.7%, from USD 237.1 Billion in 2023.
What are the largest data center construction companies?Some of the largest data center construction companies globally include DPR Construction, Turner Construction, Holder Construction, Jacobs Engineering Group, and Skanska.
Who builds data centers in India?Several companies are involved in building data centers in India. Some prominent players include Larsen & Toubro (L&T), Sterling and Wilson, and Hiranandani Group. International companies like Equinix and NTT Ltd. also have a presence in the Indian data center market.
What factors are driving the growth of the data center construction market?Factors such as increasing data storage needs, the rise of cloud computing, demand for edge computing, and the expansion of digital services contribute to the growth of the data center construction market.
What are the key challenges faced by the data center construction industry?Challenges include high initial costs, energy efficiency concerns, environmental considerations, and the need for skilled labor in constructing and managing complex data center infrastructure.
Data Center Construction MarketPublished date: Jan. 2024add_shopping_cartBuy Now get_appDownload Sample - 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
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