Summary

The Data Center Market is projected to register a CAGR of 10.90%

Key Highlights
IT Load Capacity: The IT load capacity of the data center market will have steady growth and is expected to reach 71,965.5 MW by 2029.
Raised Floor Space: The total raised floor area of the country is expected to increase to 284.2 million sq. ft by 2029.
Installed Racks: The number of installed racks is expected to reach 14,206,878 units by 2029. North America is expected to house the maximum number of racks by 2029.
DC Facilities: There are 3346 colocation data center facilities across the world. North America holds the highest market share among regions. The development of fiber connectivity, increasing reliability in power supply, and high demand for data center services from end users are increasing DC construction in the developed and developing regions.
Leading Market Player: Digital Realty Trust Inc. has the highest market share of 8.5% compared to its competitors in the data center market. The company currently operates at an IT load capacity of 2,697.05 MW and is expected to increase its capacity during the forecast period.

Data Center Market Trends

Tier 3 is the largest Tier Type

The tier 3 segment currently holds a major share of the market. These tiers have an uptime of around 99.982%, translating into a downtime of 1.6 hours per year. With the increasing adoption of edge and cloud connectivity, the tier 3 segment is expected to grow further in the future.
Europe held a leading market share, with a 6,857.78 MW IT load capacity in 2022. The United Kingdom hosts the maximum number of tier 3 data centers, with Slough and Greater London holding a major share. In Ireland, Dublin is the only region that hosts more than 98% of the tier 3 facilities, with North and South Dublin holding a major share. The tier 3 segment in Europe is expected to grow from 7,979.69 MW in 2023 to 12,110.18 MW in 2029, at a CAGR of 7.20%.
The tier 4 segment is expected to record a CAGR of 16.2% during the forecast period. Various developed countries are focusing on adopting a Tier 4 certification to get the advantage of complete fault tolerance and redundancy for every component. Therefore, many developing regions are also adopting the tier 4 zone. In the United States, over 20% of the energy mix is contributed by renewable energy, which is expected to reach 50% by 2030. The majority of data center facilities under development are adding more IT power.
The tier 1 & 2 segment had the least growth as more than 70% of all traffic moves from server to server. Modern applications require significantly more data to travel within a data center at faster speeds and are more particular about latency. Since tier 1 & 2 data centers are projected to witness minimal growth, such growth is only expected from facilities that cater to SMEs with a minimal IT load.

North America is the largest Region

The data center market has been largely concentrated in North America, Europe, and Asia-Pacific. Northern Virginia is the largest data center hotspot in the United States, accounting for over 13.07% of the data center installed capacity in 2022. However, the future market share is expected to reflect a decreasing trend until 2029, as the market has already reached maturity. Virginia offers an exemption from retail sales and uses tax for qualifying computer equipment purchased by data centers that meet statutory investment and employment requirements. Virginia was the first state to allow the tenants of colocation data centers to receive the benefits of sales tax exemption. Virginia also benefits from densely packed fiber backbones. Virginia Beach is the landing point for four new transoceanic fiber connection cables.
In Europe, the market is concentrated in FLAP-D metro markets, including Frankfurt, London/Slough, Amsterdam, Paris, and Dublin. The land price in London is around USD 150 per sq. ft. Higher land costs in London are expected to shift investments to other cities with lower land prices. For instance, Amsterdam has a lower land price for building facilities in the FLAP data center market, which is USD 38 per sq. ft.
In Asia-Pacific, Australia is one of the prominent countries in terms of the growth of data centers. The country is a major hub for data centers due to its focus on renewable energy. Sydney is now powered using 100% renewable electricity generated from wind and solar farms in regional NSW. In Melbourne, the Victorian government has also set aside USD 95 million to support AI startup development in the region. With increasing technology development hubs, the demand for data centers is expected to increase significantly.

Data Center Industry Overview

The Data Center Market is fragmented, with the top five companies occupying 26.99%. The major players in this market are CyrusOne Inc., Digital Realty Trust, Inc., Equinix, Inc., Switch and Vantage Data Centers, LLC (sorted alphabetically).

Additional Benefits:

The market estimate (ME) sheet in Excel format
3 months of analyst support

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