Data centers a ‘red-hot’ market for construction

Accordinf to ABC Chief Economist Dr. Anirban Basu, the rising demand for construction new data centers and upgrading exisiting facilities means their market is "red-hot"

Last month, during a webinar produced by Construction Executive, Dr. Anirban Basu, chief economist for Associated Builders and Contractors (ABC), said that although the commercial construction sector is still rebounding from the Covid-19 pandemic, data centers are among the most important projects.

“The fulfillment market is red-hot; ecommerce is red-hot; data centers are-red hot,” Basu said during the presentation. “Modernizing and upgrading those buildings will be key [going forward].”

According to the Office of Energy Efficiency & Renewable Energy, the U.S. was home to approximately 3 million data centers, facilities that house servers and are integral to our information infrastructure, in 2014 –  a number that’s increased over the past seven years.

In 2021, with companies such as Google and Amazon tallying so many, both large and small, there’s no official count, according to a recent report by marketing research company Accountability Information Management, Inc. (AIM).

Although the total number of data centers is unclear, the demand and need for these physical buildings has exploded in the past decade thanks to higher Internet usage for remote work and school, ecommerce and other online activities, especially since the start of the pandemic.

AIM’s report cited ConstructConnect’s database, which said there’s currently $17 billion in data center construction in the planning stage – 20% of which are new facility starts and 80% of which are additions or upgrades to exisiting data centers.

“Data center operators are always building, but when they aren’t or can’t, they use colocation services, which is another offshoot of the insatiable data center market,” said AIM president Jim Nowakowski.

He said the report should provide a framework for manufacturers, architects and other construction professionals to navigate this expanding market.

Using a sample of 297 data centers in the U.S. and Canada, the report found that Virginia, Texas and California have the most data centers. Also, 65% of data centers are located in an office setting, with government and educational settings making up smaller fractions of the distribution.

AIM’s research also showed that there are plenty of opportunities to break into the data center construction market outside of the big-name tech companies.

“You’d think that when you say you want to penetrate the data center market, you’re always looking at Google or Facebook or Microsoft, but that’s not true,” Nowakowski said. “Do you seek the volume owner or the almost-impossible-to-penetrate big boys? It’s amazing what you see when you look carefully at data.”