Data Center Construction Market Size, Share & Trends Report

Data Center Construction Market Size, Share & Trends Analysis Report By IT Infrastructure, By Power Distribution & Cooling Infrastructure, By Miscellaneous Expenses, By Tier Type, By End-use, By Region, And Segment Forecasts, 2020 - 2027

  • Published Date: Dec, 2020
  • Base Year for Estimate: 2019
  • Report ID: GVR-4-68038-585-4
  • Format: Electronic (PDF)
  • Historical Data: 2016 - 2018
  • Number of Pages: 110

Report Overview

The global data center construction market size was valued at USD 207.2 billion in 2019 and is expected to expand at a compound annual growth rate (CAGR) of 6.4% from 2020 to 2027. The construction process essentially refers to activities involved in the designing, planning, and construction of a facility. Data center costs comprise IT infrastructure, power distribution and cooling solutions, and several miscellaneous expenses. The continued increase in data consumption and the growing enterprise demand for cloud computing is expected to drive the growth of the market for data center construction.

Asia Pacific data center construction market size, by IT infrastructure, 2016 - 2027 (USD Billion)

The gradual resumption of the construction of various data center facilities, which was suspended temporarily as part of the lockdowns implemented in various parts of the world following the outbreak of the COVID-19 pandemic, and the commencement of new IT projects are expected to revive the market for data center construction in 2021. Meanwhile, the market is also expected to witness continuous investments in the construction of hyperscale facilities, which houses IT infrastructure, power equipment, and cooling equipment. Public cloud providers, such as Facebook; Google, Inc., and Amazon.com, are expected to continue investing in upgrading their existing infrastructure, thereby creating growth opportunities for the market.

The Asia Pacific IT infrastructure market witnessed significant growth during fiscal 2019. This growth can be attributed to the upsurge in the sales of networking equipment, including switches and routers. Companies, such as Huawei Technologies Co. Ltd., Dell, and HP Enterprises, played a decisive role in the growth of the market in the region. The launch of new products by these companies in the servers and networking space has contributed to the growth of the IT infrastructure segment across Asia Pacific.

The establishment of multi-tenant or colocation facilities is expected to be the key trend driving the market for data center construction over the forecast period. Incumbents of several industries and industry verticals are migrating to cloud computing, thereby driving the demand for colocation facilities. The cost benefits associated with outsourcing storage requirements are also expected to drive the popularity of multi-tenant facilities. Data center outsourcing would be a key trend to watch out albeit the growth is expected to be relatively slower during 2020 owing to the outbreak of the COVID-19 pandemic.

IT Infrastructure Insights

The server segment dominated the market for data center construction and accounted for the largest revenue share of 52.2% in 2019. The segment is expected to register a healthy growth rate of 6.6% over the forecast period. The growing preference for adopting emerging technologies, such as AI and edge computing, which is driving the demand for high-computing servers, is expected to pave the way for the growth of the segment. Besides, the hyperscale data center providers look to leverage government initiatives worldwide, such as AI for Earth campaign, which is expected to favor servers’ market growth over the forecast period.

IT infrastructure accounts for more than 80% of the overall industry revenue. The industry is heavily influenced by rise and fall in demand for server, storage, and networking equipment to cater to the computing needs across different verticals. The IT equipment demand was driven by the growing need for high computing capacity and memory storage to enable big data analytics and AI-driven applications.

Power Distribution And Cooling Infrastructure Insights

The cooling segment dominated the market for data center construction and accounted for the largest revenue share of 57.3% in 2019. The high market share can be attributed to the need for efficient cooling equipment to maintain optimum temperature and humidity levels across the data centers. IT infrastructure in data centers generates enormous amounts of heat as data centers are operational 24 hours a day and 365 days a year.

This necessitates maintaining an optimum environment to ensure the efficient functioning of the IT equipment. Hence, cooling systems are installed in data centers to manage the excessive heat generated by the processors, servers, and other IT equipment. Cooling systems also maintain appropriate humidity levels and protect the IT and electronic components from corrosion. An ideal working environment ensures efficient working of data centers and mitigates the risks of potential downtime and data loss.

Miscellaneous Expenses Insights

The miscellaneous expenses segment is expected to witness a CAGR of 2.5% over the forecast period. Miscellaneous expenses account for the security infrastructure costs, property costs, and building and shell construction costs, among other costs. The security costs include physical security and digital security of the data center. The growing instances of cybercrime and data breaches are prompting service providers to invest aggressively in highly sophisticated security solutions.

There are several fixed costs included in miscellaneous expenses, which appreciate minimally over time, which is the reason behind the relatively slower growth of the segment. The property costs include land costs, property purchase costs, consultancy fees, and brokerage fees. These costs rely on macroeconomic factors that can change according to the market situation. The property costs are anticipated to exhibit a CAGR of between 0.1%-2%, which is therefore expected to culminate into a slower growth rate for the segment over the forecast period.

End-use Insights

The IT and telecom segment dominated the market for data center construction and accounted for the highest share of 38.8% in 2019 as a result of the proliferation of smartphones and the rise in the number of active internet users globally. The continued rollout of 5G networks also allowed the segment to dominate the market in 2019 and the trend is expected to continue over the forecast period. The continued adoption of Network Function Virtualization (NFV) and Software-Defined Networks (SDN) as applications to support OTT Platforms, M2M communication, and online gaming is also expected to fuel the growth of the segment and subsequently drive the investments in this space over the forecast period.

The adoption of cloud computing, IoT, AI, and intelligent computing across several industries and industry verticals is gaining traction. Developing nations have been investing in data center facilities as part of the efforts to digitize the economy. These facilities have particularly witnessed high deployment across industries, such as BFSI, manufacturing, healthcare, and energy, among others. For instance, Huawei Technologies Co., Ltd.’s SDN-based data center has been adopted by The Industrial and Commercial Bank of China to help share multiple services on a single set of network hardware and facilitating maximum resource utilization to launch its services faster.

Tier Type Insights

The tier 3 segment dominated the market for data center construction and accounted for the largest revenue share of 50.2% in 2019. The high market share can be attributed to the increased redundancy across data centers. The rising need for high-performance computing and increased storage capacity is another factor why the tier 3 segment has dominated the market for data center construction. Tier 3 standard is popular among media providers, such as Netflix and Facebook, as well as for the incumbents of the financial and service industries.

Global data center construction market share, by tier type, 2019 (%)

Moreover, the design of tier 3 facilities offers a power backup and improvements in cooling efficiency by optimizing airflow through the architecture. It also facilitates a balanced workload across servers by continuously monitoring and distributing high-intensity workloads uniformly. These factors have encouraged colocation service providers, telecommunications service providers, social networking giants, and e-commerce companies to invest in the construction of tier 3 facilities.

Regional Insights

North America dominated the market for data center construction and accounted for the largest revenue share of over 40.0% in 2019, followed by Asia Pacific. The high revenue share of North America can be attributed to the aggressive investments in hyperscale projects. The U.S. happens to be a developed economy and already boasts an established, sophisticated network infrastructure. It is also home to major cloud service providers, such as Amazon.com, Google, Inc., and Facebook. These companies are investing in the construction of mega facilities for additional data storage and processing capabilities, thereby opening opportunities for market growth.

In Asia Pacific, the market for data center construction is expected to register the fastest growth over the forecast period, with China and India contributing significantly to the regional data center construction market. The growth can be attributed to continuous investments by cloud service providers and hyperscale’s. For instance, in February 2020, Amazon.com invested USD 339.7 billion into its e-commerce and data center business in India.

Key Companies & Market Share Insights

Favorable government initiatives to reduce barriers on IT companies to operate across the borders are yielding positive results for the network infrastructure ecosystem. As a result, companies, such as Huawei Technologies Co. Ltd, AT&T, and Sky Telecom have been investing aggressively in emerging economies in Latin America, MEA, and other regions to expand their business.

Several market players are collaborating with their clients to introduce new techniques for making the data centers more efficient and advanced. For instance, Nortek Air Solutions, a manufacturer of commercial HVAC systems, and Facebook have co-developed a new technology for cooling. The new technology called State Point Liquid Cooling provides direct evaporative cooling using outside air, thereby making the facility water-efficient and energy-efficient. Some of the prominent players in the data center construction market include:

  • IBM

  • Hewlett Packard Enterprise

  • Dell EMC

  • Lenovo

  • Oracle

  • Fujitsu

  • Cisco

  • Equinix, Inc.

Data Center Construction Market Report Scope

Report Attribute

Details

Market size value in 2020

USD 199.4 billion

Revenue forecast in 2027

USD 308.7 billion

Growth Rate

CAGR of 6.4% from 2020 to 2027

Base year for estimation

2019

Historical data

2016 - 2018

Forecast period

2020 - 2027

Quantitative units

Revenue in USD billion and CAGR from 2020 to 2027

Report coverage

Revenue forecast, company ranking, competitive landscape, growth factors, and trends

Segments covered

IT infrastructure, power distribution and cooling infrastructure, miscellaneous expenses, tier type, end-use, region

Regional scope

North America; Europe; Asia Pacific; Latin America; MEA

Country scope

U.S.; Canada; U.K.; Germany; France; China; India; Japan; Brazil; Mexico

Key companies profiled

IBM; Hewlett Packard Enterprise; Dell EMC; Lenovo; Oracle; Cisco; Fujitsu; Equinix, Inc.

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Segments Covered in the Report

The report forecasts revenue growth at global, regional, and country levels and provides an analysis of the latest industry trends in each of the sub-segments from 2016 to 2027. For the purpose of this study, Grand View Research has segmented the global data center construction market report based on IT infrastructure, power distribution and cooling infrastructure, miscellaneous expenses, tier type, end-use, and region:

  • IT Infrastructure Outlook (Revenue, USD Billion, 2016 - 2027)

    • Networking Equipment

    • Server

    • Storage

  • Power Distribution & Cooling Infrastructure Outlook (Revenue, USD Billion, 2016 - 2027)

    • Power Distribution

    • Cooling

  • Miscellaneous Expenses Outlook (Revenue, USD Billion, 2016 - 2027)

    • Miscellaneous Expenses

  • Tier Type Outlook (Revenue, USD Billion, 2016 - 2027)

    • Tier 1

    • Tier 2

    • Tier 3

  • End-use Outlook (Revenue, USD Billion, 2016 - 2027)

    • IT & Telecom

    • BFSI

    • Government & Defense

    • Healthcare

    • Energy

    • Others

  • Regional Outlook (Revenue, USD Billion, 2016 - 2027)

    • North America

      • U.S.

      • Canada

    • Europe

      • U.K.

      • Germany

      • France

    • Asia Pacific

      • China

      • India

      • Japan

    • Latin America

      • Brazil

      • Mexico

    • Middle East & Africa

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