Market Trends of Data Center Construction Industry
Growing Adoption of Tier 4 Data Center Facilities is Driving the Market's Growth
- The Tier-IV certification is currently the highest classification among data center facilities. These facilities are equivalent to data centers used by the US government. They are highly secure, reliable, and redundant. Tier-IV providers have redundancies (2N+1) for every process and the data protection stream. No single outage or error can shut down the system, and it provides 99.995% uptime per annum, which is the highest guaranteed uptime. However, the level IV infrastructure should have at least 96 hours of independent power to qualify for this tier. This power must not be connected with any outside source and is entirely proprietary.
- This tier also ensures optimized efficiency. The servers are housed in the most physically advantageous locations. This drastically extends the life of the hardware if temperature and humidity levels are kept consistent. Even the backups and dual power sources are treated like primaries. The Tier-IV data center can require up to 3 to 1 of the space required to facilitate the IT footprint. For tier IV, the kW Cost Component is USD 25,000/kW of redundant UPS capacity for IT.
- Moreover, market players are investing in hyperscale data centers, which is, in turn, driving segment growth. For instance, in May 2023, Kazuna Data Centers (Kazuna), the largest hyperscale Tier 4 data center network in the Middle East and North Africa, announced its plans to partner with Benya Group, a leading provider of integrated solutions, digital transformation, and ICT infrastructure in Egypt to enter the markets of the Middle East and Africa and Egypt region. The new USD 250 million state-of-the-art data center will be Egypt's first hyperscale data center built in Maadi Technology Park, Egypt's first dedicated investment area.
- In July 2023, Digital Realty, a leading provider of carrier- and cloud-neutral data center, interconnection, and colocation solutions, announced its partnership with GI Partners in order to start a corporation for the sale of a 65% interest in two hyperscale data Tier 4 center buildings, which are stabilized. The company will receive around USD 743 million in gross proceeds from the joint venture and the associated financing.
- As with technological advancements such as AI, IoT, and 5G leading the digital transformation, various industry sectors, such as government, finance, media, and manufacturing, are starting to demand advanced data centers with high reliability. A few prominent technological vendors in the region, leveraging their years of expertise, are launching services that allow the end user to manage data center operations better.
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North America Accounts for a Major Share
- North America dominates the global market for building data centers. A strong economy and cutting-edge network infrastructure are critical drivers for the market's expansion. The United States dominates the regional market and has many significant cloud service providers, including Amazon.com, Google Inc., and Facebook. These businesses invest in building massive data centers and increased data storage and processing capabilities, which present enormous market prospects.
- Furthermore, the growing demand for data security and privacy is driving the demand for data centers. According to the Identity Theft Resource Center, the count of data breaches in the United States in 2022 was 1,802. However, around 422 million individuals were affected by data breaches in the same year, including data leaks, breaches, and exposures. Although these are three separate events, they have one feature. An unauthorized malicious actor can access sensitive data under three circumstances. With the rise of data breaches and cyber threats, organizations and businesses seek secure and reliable data handling and storage solutions that only advanced data centers can offer.
- The United States is analyzed to hold a significant share. The rise in the new data centers in the country would drive the market. For instance, in May 2023, Polish software organization Comarch launched a data center of around 32,000 square feet (3,000 sqm) in the city of Phoenix, Arizona. The new data center is anticipated to be fully active starting the year of its announcement. The proposed data center comprises four server rooms with 160 racks and is expected to offer services with managed services, colocation, cloud hosting, disaster recovery, and backup services. It is also projected to provide meet-me rooms (MMR). Such developments are creating growth opportunities for the data center power market in the United States.
- Moreover, in January 2024, Vertiv Group Corp. announced that it increased the production capacity of its switchgear, busway, and integrated modular solutions (IMS) business by more than 100% since it acquired E&I Engineering and PowerBar Gulf LLC, switchgear, busway, and IMS business in 2021 and further, it is planning to expand its existing facilities through the end of 2025.
- The demand for Unified Communications-as-a-Service (UCaaS) solutions from telecom and business technology resellers in North America is also a factor in the market's expansion. To maximize system resilience to MSPs, VARs, ISPs, and interconnects, a player like SkySwitch offers white-label UCaaS from geographically varied sites.
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