In the data center industry, it’s best to plan for the unexpected. But how do you plan for a global pandemic that would send billions of workers home for months on end, kickstart a debate on who qualifies as an “essential worker,” and digitally transform entire industries in a matter of months?

Unlike power outages or typical construction challenges, which are largely preventable with the right planning, COVID-19 was a black swan event that caught the vast majority of the world by surprise. A little over a year ago, everything turned upside down, and the resulting changes to society are still being measured. But one thing is for certain: The data center landscape has been permanently altered.

As normal, everyday interactions shifted to the cloud, it was data centers that scaled to meet the challenge. Demand for personal entertainment, like streaming services and online gaming, skyrocketed. Likewise, the search for business continuity found many organizations transitioning business processes overnight with tremendous growth in video conferencing and other cloud-based services. Working from home, teams learned to rely on various digital tools to communicate and collaborate, and data centers provided the critical infrastructure necessary to support remote work. As a result, 2020 has emerged as the latest inflection point for the data center industry with growth expected to exceed 16%, reaching $3.1 billion.

Still, data centers don’t just appear out of nowhere — much as it might seem like they do. It takes years of planning to forecast capacity and build accordingly. And COVID forced many data center service providers to delay projects out of the need to set new safety guidance, comply with lockdown restrictions, overcome supply shortages, and more. The result is an industry that’s now booming to catch up, with several trends that bear consideration as we barrel into year two of the pandemic.

Construction Backlogs, Hyperscalers, and Colocation

At the start of the pandemic, work-from-home trends and personal entertainment habits drove a need for immediate speed and scalability. Colocation providers offered one of the quickest solutions to this problem for enterprises and hyperscalers. Instead of taking months or years to build their own computing facilities, colocation offered these groups the ability to stand up servers and storage in just a few weeks — provided they could find space to lease.

As a result, colocation and cloud providers opened 15 million square feet of data center space in 2020, despite restrictions to building work, with growth in 2021 expected to exceed 16.5 million square feet. But will that be enough?

Hyperscalers continue to drive the world’s data center construction boom. However, the pandemic only worsened the national backlog of new construction projects, and supply is just now starting to catch up to immediate and future capacity needs. Further, with workers more spread out and compute needs moving away from centralized offices, data centers need to be more distributed to support demand at the edge — meaning companies have to get creative with their approach.

Agile Construction Methods

To quickly ramp up their capacity, some of the world’s largest organizations have turned to innovative construction methods that aid rapid deployment. For example, modular construction, which often leverages prefabricated material for a more streamlined engineering and design process, bypasses traditional challenges to data center construction and allows for faster deployment at the edge. Microsoft and Dell are just a couple of companies that have turned to modular construction in the past year to add capacity.

Instead of taking years to map out, design, build, and equip a data center, modular construction allows for the typical construction timeline to be shortened by between 50% and 70%. This is a massive timeline acceleration in an industry that averages two years to fully build and fit out. In addition, without as much construction overhead, the final cost typically comes out at a much lower price point compared to traditional builds and competitive offerings.

With exponentially increasing data demands due to COVID, coupled with an ongoing backlog of construction projects, expect innovative approaches like this to pick up additional steam as a lasting effect of the pandemic. The industry was already facing a supply crunch before COVID-19, and the need for speed and flexibility isn’t going away any time soon.

And as we look past the pandemic, our industry is faced with a massive undertaking to support exponential digital transformation acceleration, the rise in edge computing, increasing amounts of IoT-based data, and the full rollout of 5G. All of that data must get computed, processed and analyzed somewhere. So, it’s safe to say that data centers are not only a critical backbone of the modern information economy, but they are the key to unlocking technology of the future.