By Damien Gallogly

The past year has been full of unexpected challenges for the construction industry. We’ve been battling a virus, site shutdowns and a decrease in total construction jobs, declining to 6.5 million in 2020. But through it all, data centers have posted a resilient performance, even with a 10.3 percent decline in spending. As demand for streaming services, remote work and virtual entertainment grows, so too will the data center market, and industry experts are expecting a bright future. In fact, total data center infrastructure is projected to grow by 13.8 percent in 2021. But with the industry projected to reach $32.37 billion by 2025, what key trends will providers have to consider in order to stand out in a competitive market?

Following the lead of the new U.S. administration, data centers will be looking for sustainable models and renewable energy sources. This will help colocation providers attract clients into their space, as well as meet LEED requirements. With an increased remote workforce, large-scale data breaches rose by 273 percent in the first quarter of 2020. This has forced data center providers to increase the focus on security practices, both physical and cyber. Overall, the data center industry must be able to innovate in order to ensure that the market and demand continue to grow, especially as competition rises.

KEY MARKETS
Although secondary global data center markets are beginning to emerge, particularly in the Asia Pacific region, which is home to nine of the top 15 fastest growing megawatt markets, the U.S. still dominates. The U.S. accounts for almost 40 percent of the major cloud and internet data center sites. It also has the largest data center market in the world, with over 150 data centers and more than 10 million square feet of data center space in North Virginia. Other primary markets, including the southeast region of the United States, will continue to see an upsurge in demand, with new project starts expected and existing projects requiring completion.

Within the U.S., secondary data center markets are also emerging and are poised to see growth in 2021. Typically, secondary markets offer tax incentives to data center providers and more affordable land opportunities, which can help to accommodate larger scale projects. One such secondary market that is experiencing a surge in demand is Hillsboro, Oregon. With an optimal climate for data centers and subsea cables that provide connectivity to Asia, it is emerging as a hub for data centers in the Western United States.

EMERGING TRENDS
Between cooling processes and intensive energy requirements, the data center industry is not known for its sustainability practices. In fact, data centers use more than 1.8 percent of the entire United States’ power supply. Luckily, major providers are changing their views and looking to improve renewable energy and work towards sustainability goals. One key practice that’s being considered for use is artificial intelligence (AI) and machine learning (ML). These can work to regulate temperatures, creating a consistently cool environment for the technology. AI and ML are also being used to monitor the equipment, as they can determine changes in noise that signal an issue in the data center. This can help to predict failures before they even happen. Many of the large data center providers are also turning to renewable energy sources to power their services. With ambitious plans from the current administration to make the U.S. carbon-neutral by 2050, colocation providers will see a renewed interest from their clients for sustainable options.

Hyperscale data centers are expected to dominate the market over the next few years, reaching $23.3 billion by 2024. On the other hand, non-hyperscale will only grow to just over $7.2bn. Large-scale hyperscale providers have doubled in the past five years, with the U.S. seeing 597 hyperscale providers at the end of 2020. One of the reasons behind this demand is that they are more sustainable than other data center offerings. Another reason is consumer demand. To keep up with new work and entertainment demands, hyperscale cloud service providers are expected to deploy 2.1 million new IT racks by 2025, translating to $62 billion in capital spending on infrastructure. For data center providers in this space, they’ll need to consider this demand when planning their projects and choosing sites.

CONSTRUCTION CONSIDERATIONS
Due to the sensitive nature of the information stored in data centers, physical and cyber security are becoming increasingly important in the design of the facilities. The first consideration for providers is who can access the physical site and how to provide that access. Data centers need to use multiple layers of security, including the use of x-rays and biometric identification. Edge computing is also on the rise — which moves data centers closer to the clients to reduce latency and lag — which will increase the risk of cybersecurity breaches. That’s because almost 60 percent of these computing systems don’t encrypt data natively, making them vulnerable to attackers and bots. Focus is required from data center providers to mitigate that risk.

Another key construction consideration is cooling solutions. The sheer amount of technology stored and running within a data center means that temperatures run extremely high. Unfortunately, this can lead to costly power outages. Traditionally, data center operators have used airflow to cool the equipment with HVAC systems to control and lower the temperature efficiently. With this method, they have to consider aisle arrangement, rack placement, blanking panels and continual monitoring to ensure that everything is operating optimally. Recently, liquid cooling has become a popular alternative to air-based cooling systems. This approach can be significantly more efficient and uses considerably less power than typical HVAC cooling systems. Unfortunately, industry standards for liquid-cooling solutions are still missing, as is the ability to transition seamlessly from air-cooling to liquid-cooling in existing data centers.

THE FUTURE OF DATA CENTERS
The next few years will be critical for data center providers. Innovation and advances in technology will help to optimize data center performance by decreasing power consumption and increasing the ability to keep up with consumer demands. This will also make the industry increasingly competitive. Although three key providers account for over half of today’s hyperscale data centers, new players are emerging. Ensuring that they can provide services to meet clients’ demands, such as providing sustainable operating and building approaches, will help them succeed. For an industry that is expected to grow by 8.24 percent over the next few years, driving change through innovation will be imperative to stay relevant in the market.

Damien Gallogly is Director at Linesight. He can be reached at damien.gallogly@linesight.com