Market Trends of United Kingdom Data Center Construction Industry
The IT and Telecom is Expected to Register Significant Share in the Market
- Cloud and telecom had the highest shares of the market, with 20.3% and 17.9%, respectively, in 2023. The segments are expected to witness stable growth, accounting for 20.1% and 20%, respectively, in 2029.
- The UK government announced its new digital strategy, promising to deliver over GBP 1 billion of savings by 2025 with significant improvements in online public services. A GBP 90 million budget was allocated in 2022 to support the UK's existing platforms, services, and content. This scenario is catering to a major adoption of data centers.
- Further, the majority of end users are swiftly embracing cloud technology, drawn by its widely touted benefits, notably scalability. For instance, in June 2024, a news article reported that the London-based energy distributor and system operator, UK Power Networks, is finalizing a significant shift to a hybrid cloud setup. This transition is poised to cater to approximately a third of the UK's populace and commercial entities. While the core of this migration revolves around Microsoft Azure, UK Power Networks will uphold on-premises systems in a pair of data centers. These on-premises setups specifically house highly sensitive data and services, safeguarding them from potential cyber threats. CIO Matt Webb, with a 15-year tenure at the company, highlighted this strategic move.
- Moreover, many OECD countries witnessed unprecedented growth in their ICT sectors in 2023. The United Kingdom, Belgium, Germany, Austria, and the Netherlands saw growth rates exceeding 10%. This upward trend is set to continue, creating demand for enterprise cloud and software-as-a-service (SaaS) utilities and e-commerce, streaming video services, and mobile apps that are becoming omnipresent in today's society.
- The UK government is actively investing in expanding its telecom networks to bolster the nation's digitalization efforts. In a notable move, in July 2024, the government pledged GBP 40 million to ensure nationwide 5G coverage by 2030. This initiative aligns with UK businesses' increasing emphasis on digitization, underlining the pivotal role of robust network connectivity in driving the nation's economy.
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Tier 3 is Expected to Hold a Major Share in the Market
- In 2023, there were around 150 data centers in the United Kingdom with Tier 3 certification, with a cumulative IT load capacity of 1,717 MW. Reliability and affordability are the major factors driving the demand for tier 3 data centers in the country. The tier 3 segment is projected to register a CAGR of 9.12% to reach around 3,581 MW by 2030.
- By 2023, London had established itself as a leading hub for Tier 3 certified data centers. Digital Realty Trust Inc. led the pack with an impressive IT load capacity of 117.9 MW, strategically distributed across 14 facilities. Equinix Inc. closely followed, with a capacity of 221 MW spread over 15 facilities. ST Telemedia Global Data Centres operated 11 facilities, hosting an IT load of 180 MW. CyrusOne Inc. managed 123.9 MW across six facilities, NTT Ltd. maintained 76.4 MW in 7 facilities, while the rest of the market players held smaller shares.
- London is slated to construct approximately 20 data center facilities, each meticulously designed to meet Tier 3 standards. These strategic facilities are projected to collectively contribute more than 1,500 MW of IT load capacity to the region.
- Key players planning to invest in data centers include Equinix Inc., NTT Ltd, Echelon Data Centres, Vantage Data Centers, and Proximity Data Centres. These developments in the UK market are poised to amplify the demand for Tier 3-certified data centers. This heightened demand, particularly within the Tier 3 category, is expected to fuel the necessity for data center construction services in the coming years.
