While COVID-19 continues to cause turmoil within the construction industry, 2021 remains on track to build in record numbers. The cloud hyperscale market has seen the most activity, supporting global operational models that include new applications and remote work environments. A surge in processing demands resulted in increased construction to support capacity in nearly every different application. Required capacity requirements reportedly range from 500% to 750% in infrastructure builds. While there is a big focus on supporting hyperscale, other markets include international programs as well as edge.
Below are some thoughts on what to expect next year in various data center markets.
Hyperscale — The major focus on supporting hyperscale in 2022 is already underway, as plans will be solidified by the end of this year. During the fourth quarter (Q4) of 2021, hyperscalers are creating development plans to include both national and international projects. Where new prototype designs work well within the U.S., global areas are restricted to multistory data centers due to land cost and power supply constraints.
Additional challenges for international facilities include site selection (based on populous, power availability, and latency) and navigating through the complexities of local development rules and regulations. In many cases, international projects are easier if professionals partner with a local developers rather than trying to manage the potential obstacles from afar. Many hyperscalers are successful working with domestic firms using a bridging approach. This tactic has a design developed by U.S. firms with local, prequalified subcontractors to assist with the permitting and construction administration process. Firms that have their global network for operations in place are well positioned to support international hyperscale projects.
Operations — Data center operations and engineer recruitment continue be the highest concerns within the industry. As capacity requirements rise, the recruitment of qualified people to operate and engineer data centers is limited. With the rise of social media, many engineers are much more aware of new career opportunities, creating a higher turnover rate than has been experienced in the past. Companies, such as Salute Mission Critical, have developed a method of integrating engineering and operations into the construction process for an easy transition once a site has been commissioned. I expect this demand for operations personnel will continue in 2022 and beyond.
Edge — While analysts predict a surge in edge compute in 2022, activity is growing among colocation providers offering “second step” processing. First step processing includes connectivity to 5G and distributed processing, while second step typically involves data centers utilizing larger installations to process prior to forwarding data to campus settings. Typical installations for second step processing range from 1.5-MW to 4.5-MW installations. Cloud providers not only have edge products but are also focusing on second step processing using colocation providers. Step one edge (IoT) will be a distributed processing model operating in remote areas to include containers as well as smaller products installed within a commercial building environment. Deployment of step-one processing within several urban environments creates a distribution issue consisting of several installations at one time — something the current industry has not had much experience in.
Multitenant Data Centers (MTDCs)/Wholesale/Colocation — MTDC design work continues to be robust; however, much of the construction is taking place overseas. There is a continued focus on MTDC building space to support hyperscale clients due to speed-to-market hyperscale volumes. Much of the volume consists of step-two processing, while other installations are larger. The key to success in this market will be offering prebuilt space, which is expensive but highly desired. Mergers and acquisitions in this area remain strong as seen in the recently announced QTS sale to Blackstone. Enterprise data center or smaller MTDC acquisitions are also in play.
International Markets — International data center builds will continue to be robust, having U.S. companies expanding footprints across Europe, Asia-Pacific, and Latin American markets. The anticipated volume among data center consultants is predicted to increase 5% to 25% above their current sales volume. Companies that have 20-plus years working overseas will have the advantage migrating U.S. data center companies to build. In many cases, design-build is a preferred method of delivery overseas, which complements the bridging approach utilized by U.S. consultants and owners. Several U.S. wholesale/colo providers have announced that 80% of new construction will be overseas.
According to Global Newswire’s recent market study report, the global data center accelerator market was valued at $10 billion in 2020 and is likely to account for $89.2 billion by 2028 — a compound annual growth rate of 36.7% during the study period.
"The rapid expansion can be credited to increasing utilization of AI technologies in data centers and rising popularity in cloud-based and edge technologies," the report stated.
Gartner Group has recently announced that, by 2025, 75% of processing will be conducted through edge-to-campus infrastructure.
Challenges include capacity management from both the data processing industry as well as the capacity to support qualified engineers and contractors. Service providers will continue to struggle to recruit qualified personnel while maintaining a high level of customer service. Smart consultants may need to decline new work to maintain a sustainable delivery process. Operational approaches will need to be adjusted in both hyperscale and edge.