Summary

The US data center construction market was valued at USD 7.24 billion in 2020, and it is expected to achieve a value of USD 14.17 billion by 2026, registering a CAGR of 11.64% over the forecast period of 2021-2026. With the COVID-19 pandemic being widespread in the country at the beginning of 2020, problems concerning the construction of new data center capacity have risen. As a result, a majority ofthe vendors have been postponing or canceling projects or activities, which could increase the risk of infection. On a similar note, in 2020, Facebook significantly reduced its construction activity at campuses in Oregon, Texas, to name a few, in the wake of reducing staff to ensure safe operability under current OSHA and CDC guidelines.

- Data center construction in the United States has exploded in recent years, with multiple states vying to lure internet giants in need of space for their physical computer systems. According to Turner & Townsend, in 2020, the leading data center markets in the United States ranked by cost of construction included New Jersey (USD 9.8 per watt), Silicon Valley (USD 9.8 per watt), and North Virginia (USD 8.4 per watt).
- For instance, Northern Virginia has become known as Data Center Alley because tech-focused companies flock to the area due to amenities, like its proximity to water required for keeping data center buildings cool. According to the Loudoun Virginia Economic Development Association, the region has the world’s largest concentration of data centers, with more than 18 million square feet in operation and millions more being planned or developed.
- Multi-tenant data center operators leased almost 700 megawatts of capacity in the United States in 2020, more than tripling the leased capacity of 2019, with Microsoft dominating leasing in America. Microsoft led the nation in leasing more US data center capacity in 2020, according to North American Data Centers’ annual data center real estate market report published in January 2021. Microsoft leased 178 MW of capacity in Virginia alone with multiple data centers and leasing in other large US, markets, including the Bay Area and Phoenix.
- Similarly, it also reported that Chicago had its strongest year during the past three years with more than 45 MWs leased by Microsoft, and in 2021, they are expected to have more than 400,000 square feet under construction in the suburbs. Downtown also had strong leasing, led by QTS. Furthermore, Skybox and Stream have acquired properties to expand.

Key Market Trends

Growing Cloud Applications, AI, and Big Data to Drive the Market

- The demand for cloud-based solutions in the country is surging due to the growing application of the technology and consumer propensity toward cloud, as this technology allows the user to access the data from remote locations as well. The increasing realization among companies about the importance of saving money and resources by moving their data to the cloud, rather than building and maintaining on-premise infrastructure, is driving the demand for cloud-based solutions, and hence, the adoption of cloud-based contact center services.
- According to the Flexera 2020 State of the Cloud Report, several enterprises have agreed that their cloud usage may exceed the planned usage at present, owing to the impact of the COVID-19 pandemic. The enterprises are forced to meet increased demand as online usage grows, resulting in the need for extra capacity required for current cloud-based applications. Globally, over 59% of enterprises expect that their cloud usage may be significantly higher than planned, and about 50% of small- and medium-sized enterprises (SMEs) expect their cloud usage to escalate.
- In August 2020, The US government announced USD 1 billion in new funding for multidisciplinary AI and quantum computing research hubs. A total of 12 hubs will be funded, each embedded within different agencies of the federal government. Their work will span a diverse range of topics, from machine learning for atmospheric and ocean science to speeding up high-energy physics simulations with quantum systems. This is poised to increase the adoption of AI data centers that will help companies drive data-driven decision-making.
- With all its computing and storage needs, big data is driving the development of data center storage hardware, network infrastructure, and new ways of handling ever-increasing computing needs. The essential infrastructure aspect of Big Data analytics is storage.

Healthcare Industry Expected to Grow

- Data generation is growing exponentially across the end-user industries, with the healthcare industry holding a significant share. The healthcare industry generates enormous amounts of data. Collection of data by various healthcare departments from clinical trials and several outpatient records is also required to analyze such data and derive meaningful analysis. However, most of the hospitals involved in such data collection are not equipped with relevant infrastructure.
- As a result, many healthcare institutes are facing pressure to reduce the cost structure of a company, to deliver full regulatory compliance and efficient solutions, with constraints about the increasing amount of data being generated.
- Increasing regulations on data acquisition and records, especially the ones related to clinical trials, are drawing several healthcare clients toward datacenters. Further, several government initiatives taken up globally are expected to boost the colocation market. For instance, the Chinese government has pledged to create an industrial scale of medical services by 2020, which includes the inception of a new digital health trail for all citizens in the country.
- To facilitate such transformation, over the forecast period, the country has planned to establish over 100 medical data centers that enable the sharing of health and medical data resources across several medical organizations in the country. Such a scenario opens several opportunities to the colocation market, globally.

Competitive Landscape

The competitive landscape of the United States Data Center Construction Market is moderately fragmented owing to the presence of several regional players offering innovative solutions and services in the market. The solution providers are increasingly expanding their data center capacity to cater to the growing demands of the customers.

- June 2020 - Aligned announced the expansion of its hyperscale data center campus in Ashburn, Virginia, beginning construction on a second 120 MW facility in Loudoun County. Building on Aligned’s existing 370,000 sqft, 60 MW Ashburn data center completed in 2019, the adjacent new 513,000-sqft facility will add 120 MW upon completion. At full build, the company’s hyperscale campus will offer approximately one million sqft of space and 180 MW of capacity. The company said that the campus sits positioned atop fiber and conduit routes that offer access to more than 50 carriers in the immediate area.

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Table of Contents

1 INTRODUCTION
1.1 Study Assumptions and Market Definition
1.2 Scope of the Study

2 RESEARCH METHODOLOGY

3 EXECUTIVE SUMMARY

4 MARKET DYNAMICS
4.1 Market Overview
4.2 Market Drivers
4.2.1 Growing Cloud Applications, AI, and Big Data
4.2.2 Rising Adoption of Hyperscale Data Centers
4.3 Market Restraints
4.3.1 Increase in Real Estate Costs
4.4 Industry Attractiveness - Porter's Five Forces Analysis
4.4.1 Bargaining Power of Suppliers
4.4.2 Threat of New Entrants
4.4.3 Bargaining Power of Buyers/Consumers
4.4.4 Threat of Substitute Products
4.4.5 Intensity of Competitive Rivalry
4.5 Key US Data Center Construction Statistics
4.5.1 Number of Data Centers in the United States, 2019
4.5.2 Number of Data Center Under Construction in the United States, 2019
4.5.3 Average Capex And Opex for the US Data Center Construction
4.5.4 Power Capacity Absorption, Data Centers, in MW, Selected Cites, 2019
4.6 Assessment of Impact of Covid-19 on the Market

5 MARKET SEGMENTATION
5.1 Infrastructure
5.1.1 Electrical Infrastructure​
5.1.1.1 UPS Systems​
5.1.1.2 Other Electrical Infrastructure​
5.1.2 Mechanical Infrastructure​
5.1.2.1 Cooling Systems​
5.1.2.2 Racks​
5.1.2.3 Other Mechanical Infrastructure​
5.1.3 General Construction
5.2 Tier Type
5.2.1 Tier-I and -II
5.2.2 Tier-III
5.2.3 Tier-IV
5.3 End User
5.3.1 Banking, Financial Services, and Insurance
5.3.2 IT and Telecommunications
5.3.3 Government and Defense
5.3.4 Healthcare
5.3.5 Other End Users

6 COMPETITIVE LANDSCAPE
6.1 Company Profiles*
6.1.1 IBM Corporation
6.1.2 Schneider SE
6.1.3 DPR Construction Inc.
6.1.4 Fortis Construction Inc.
6.1.5 Hensel Phelps Construction Co. Inc.
6.1.6 HITT Contracting Inc.
6.1.7 AECOM Engineering
6.1.8 Clune Construction Company LP
6.1.9 Nabholz Corporation
6.1.10 CyrusOne Inc.

7 INVESTMENT ANALYSIS

8 FUTURE OF THE MARKET