Data Center Construction: An Insatiable Market Update

We were recently asked questions about the Data Center Market, and thought we would share them with you. Please let us know how we can help your business development. Thank you. — Jim Nowakowski on behalf of AIM.

  1. What is the outlook for the data center sector in 2022? If you ask Google, you’ll get over 87 million results as an answer to that question. The real question is, who do you believe? And while the results from that search have many fine companies with projections all indicating up (i.e., as one company pointed out, “By 2025, 85% of infrastructure strategies will integrate on-premises, colocation, cloud and edge delivery options, compared with 20% in 2020.”), the real driver of data centers is IoT. That, and the fact that sustainability is a driving force behind these facilities as more and more communities become zero-emissions conscious. Suffice to say that AIM, our company, says, “hold on.” We published an article last July Data Center Construction: An Insatiable Market, which tells us of the intense interest in that type of information. So as of this interview, I can tell you that there are 180 projects valued at $9.4 billion in the planning stages going on. I can also tell you that most of these projects are going on at colleges and universities and government buildings. Fire and Police stations are doing their fair share of them as well. But as far as value of projects, sports arenas and convention centers and offices are really where that action is. But, hospitals and clinics on a per average project are huge. The point is, data center growth is still insatiable.
  2. With regards to construction, are there more data center projects in the pipeline heading into 2022? According to our data, since 2019, the number of projects has been steady as she goes. While you can say that you had more projects in 2021 than 2020, it was a little less than 2019. But then, 2020 was the year of COVID-19. However, our data point out that the valuations of these projects has increased significantly – telling us that the projects are getting more complex. Actually, the value of these projects was 29% more than those in 2019. And keep in mind that in 2019, there were more projects going on. That tells us there’s more being built into these projects. So, “more” is a relative word. You need a reference point. Compare the specifications of a datacenter pre-COVID with one after COVID. Indeed, compare any category of specification and it’s almost guaranteed it’s different.
  3. What are some trends developing in the data center sector, especially any trends that are affecting or will affect the construction industry? Here again, start with Google like we all do. There are great articles on what people think and see as trends, but if you ask us, it’s sustainability. You’re seeing more and more specifications contain requirements for producing a sustainability action plan. You’d rarely see that in the past. In fact, for the projects – all the projects – that we can see, “sustainability” as a requirement is in only 7% of the specifications. But in data centers, it’s 12%. That tells you something, doesn’t it? And don’t forget security. Digital mischief is on the rise and will continue to rise. These data centers are going to not only have to deal with digital security, but physical security.
  4. Are there any other important points you think is important to mention when reporting on the outlook for the data center sector? Well, think about this. Every company that exists needs, uses, processes data. Where that processing happens can be in a separate building, in their building, or in a cloud (which is really fed by a building, isn’t it?). We think when we say “cloud” of the sky, but the clouds is really a building somewhere with servers. Where the servers are comprising the opportunities for data centers. Think of this way: your phone is a little data center, isn’t it? Data centers feeding data centers feeding data centers. I’m old enough to remember life without an air conditioner. Nowadays, who among us can imagine life without air conditioning? Life without data and the ability to process it becomes less rich, less fulfilling. I know that’s a point that be argued both ways. Some people think there’s too much. And sometimes there is. But, as long as keep people deep demanding it – and devices are talking more and more to each other – data centers will have a bright future.