An Overview: Global Data Center Construction

As user needs for colocation, storage and other data center services rises, facility operators are responding by growing their service footprints, adding to increasing data center construction projects across the globe.

Recent data center research shows a considerable amount of activity in the global data center construction market. As user needs for colocation, storage and other data center services rise, facility operators are responding by growing their service footprints, adding to increasing data center construction projects across the globe.

Global Market: Growing Colocation and Sustainability Demands
According to a recent TechNavio report, the global data center construction market has been steadily growing, and is poised to continue for the next three to four years. The report projected that sector expansion will come at a compound annual growth rate of 21.99 percent until 2018.

One of the main driving factors is the rising demand for data center colocation services by clients in a range of areas worldwide. Due to the current complexity of data center facilities, organizations struggle to manage these resources in house and are increasingly turning to data center service providers to aid in these efforts. 

The report also noted that there has been a growing trend in the adoption of data center sustainability components for greener computing facilities. One aspect driving these environmentally friendly practices are regulatory guidelines being implemented by governing bodies and industry authorities. These sustainable technologies are appearing in a range of data center systems, including in electricity consumption and cooling.

"The data center service providers are adopting alternative sources of power such as solar energy to power the data centers," said a TechNavio analyst. "Further, technological developments in powering and cooling systems for data centers are leading to the evolution of solutions that consume lower power and delivery of high-performance computing services."

Data Center Construction Growth in Latin America
In particular, these growing demands for data center colocation services have affected the Latin American market. TechNavio's report on this sector shows growth there will continue at a compound annual growth rate of 26.95 percent until 2018.

The data center research also highlights the emergence of new facility designs in the Latin American market, which are creating more advanced, better performing structures.

Data Center Construction Cost Reduction
As data center construction projects continue to increase, studies show that the costs of these initiatives are falling. WiredRE primary research suggests that historic costs for data center construction of a Tier III facility range from $9 to $13 million per megawatt. However, more recent construction cost data from seasoned and experienced data center developers is ranging from $7 to $9 million per megawatt. The consensus going forward looks to be a benchmark of $7 million per megawatt, as has been revealed in disclosures by public companies such as DuPont Fabros (DFT), CyrusOne (CONE), and QTS Realty Trust (QTS).

The major factors accounting for this drop in construction prices include an increase in engineering and design excellence experience, as well as boosted implementation of repeatable processes. The market is also seeing considerable advancements in MEP technology, as well as rising adoption of modular approaches within both standard design and individual components. Furthermore, improved capital management of resources and an economic cycle reduction in real estate costs are adding to the characteristics creating reduced construction costs.