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Data center construction increased 43 percent between 2016 and 2017, according to a report by Jones Lang LaSalle, and that momentum is not expected to slow anytime soon. Between 2017 and 2021, Technavio analysts anticipate market growth to occur at a compound annual rate of 6.34 percent, reaching $75 billion in 2021. 

With data center construction ramping up around the world, competition among construction contractors is fierce for a piece of the pie. A search for data center construction on Google returns pages of contractors offering their services to companies building these facilities, primarily the big five: Facebook, Google, Amazon, Apple and Microsoft.

To win these mission-critical projects, contractors must have a proven track record of exemplary on-time delivery, a highly trained workforce, constant communication, redundant systems and expert knowledge of data centers’ unique demands—with absolutely no room for error. Contractors also must stay ahead of the industry’s quickly changing demands. 

“I would relate construction to the health care profession,” says Mark Jones, regional vice president of Dallas-based Structure Tone Southwest, which broke into the market in the late 1990s and now derives 30 percent of its total annual revenue from mission-critical work. “Most contractors are general practitioners; they can build a box or facility. For mission-critical data centers, contractors are more like the brain surgeon, because the data center is the brains of an organization,” Jones says. 

Colocation

The market continues to move away from constructing enterprise sites for just one client to developing colocation sites where one client is the building owner that outsources data center operations. In the colocation model, companies can lease parcels of the data center ranging from 1 megawatt to 40 megawatts. 

“The concept is similar to an apartment building. Someone comes in and buys some megawatts here and some there,” says Evan Antonides, vice president of HITT Contracting’s technology group. “The owners are still the big firms, but they’re outsourcing construction of the data center and leasing 40-megawatt chunks to smaller organizations in need of space.”

 To accommodate the colocation model, many data centers are now hyperscale, a term that refers to the size of the center and its ability to grow with increased demands. A hyperscale facility provides the appropriate power and redundancy needed to host users as their needs increase. 

The United States is leading the way in hyperscale data centers, largely due to the big five. By the end of 2016, the United States was home to 135 of the world’s 300 hyperscale data centers, according to Datacenter Dynamics. 

Using the colocation model, Antonides says companies can spend up to 40 percent less compared to an enterprise building. Though big-name data center clients are continuing to build their own enterprise facilities, the ratio of enterprise to colocation facility construction is about 50/50, Antonides says. 

“Typically, the colocation user is smaller, while the enterprise user is the large, cloud-based data center,” Jones adds. 

Hot Spots

In the United States, the top 10 locations for data centers are northern Virginia/Washington, D.C.; Santa Clara/San Jose/South Bay, Calif.; northern New Jersey; Chicago; Dallas/Fort Worth, Texas; New York City; Phoenix, Ariz.; Seattle; Los Angeles; and Atlanta, according to Site Selection Group, which provides location, economic incentive and corporate real estate services. 

One of the biggest U.S. markets is Loudoun County, Va., just outside of Washington, D.C., known as Data Center Alley. Seventy percent of the world’s internet traffic runs through northern Virginia, according to the county’s Department of Economic Development. Located so close to a top data center 
market, HITT is the seventh largest mission-critical data center builder in the country, resulting in 25 percent of the company’s annual revenue. 

When determining where to build a new data center, clients typically look at a few key site characteristics, including local manpower, adequate and affordable power sources, affordable land prices and optimal climate conditions, according to Expedient, a provider of IT infrastructure as a service (IaaS) solutions. 

New Builds Vs. Renovations

Though many companies are building new, state-of-the-art colocation or enterprise facilities, others are upgrading their existing data center buildings, many of which came online about 15 years ago and now house equipment that has reached the end of its life. 

Contractors renovating older data centers must have high-quality training and precise procedures to make sure the data centers continue operating without disrupting service. 

“Clean room construction practices are critical. We have teams trained to work in live-environment settings,” Antonides says. “We develop a plan and execute using the Method of Procedure, a risk management tool that allows us to safely execute and work in critical environments. We are able to replace equipment, such as generators and air handlers, on sites that need to remain 100 percent online.”

Currently, HITT’s work in the data center market is about 60 percent greenfield projects and 40 percent live-environment renovations. On greenfield projects, contractors must be able to adapt to the fast-paced data center demands. 

“Users need space quickly. Just-in-time delivery is a term we hear often,” Antonides says. “A facility that used to take two years to build is now a six-month delivery, so we have adapted to accommodate those schedules.”

Looking Ahead

Though the data center construction market may change, demand is not expected to decrease anytime soon. In fact, companies such as HITT and Structure Tone expect their workload to increase and are working to stay ahead of the curve. 

“My grandfather put food on the table with steel, my dad put food on the table with oil, and I’ll put food on the table with Facebook Live and Pokémon Go,” Antonides says. 

He expects data center users to expand, fueled by hospitals moving toward digitized recordkeeping, and an increase in the internet of things.

“All of that data has to be stored somewhere,” he says.

The market also is expected to shift toward making data centers greener, a tough goal considering the associated size and technology demands. 
Structure Tone already is seeing developing technology that will reduce data centers’ cooling costs by submerging servers in liquids to control their temperature. Others are taking advantage of a location’s natural climate. For example, plans are in the works for a data center to be built in the Arctic in Norway, using the cold weather to keep servers cool. 

U.S.-based data centers owned by the big five also are moving toward renewable energy sources such as wind and solar—a tricky endeavor considering the 100 percent online time with no service interruptions required. They also are moving toward sustainable operations, such as more efficient infrastructure and waste recycling. 

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