GLOBAL OVERVIEW

Old challenges meet with new solutions

Lisa Duignan, Global research lead for the Data center construction cost index

In the ten years since we began publishing this report, the global data center sector has evolved from a niche sector within commercial real estate into a major driver of global construction activity – and indeed the global economy (representing an estimated two to seven percent of GDP, country-dependent). It’s increasingly clear that the next decade will be nothing like the last.

AI drives unprecedented scale

The transformation brought by artificial intelligence comes with an exponential need for computing power. This, along with cloud adoption and the growing importance of data and sovereign capacity, is driving data center investment and development at unprecedented scale, reshaping the construction landscape.

New strategies forming

Demand and competitive pressures put speed to market firmly at the top of clients’ agendas. At the same time, the industry’s challenges have intensified, from rising material and labor costs to difficulties securing the power, infrastructure, specialist equipment and planning consents required. Facing these hurdles, together with growing political and public scrutiny, data center developers, owners and operators are adapting and finding new solutions to improve the scale and pace of delivery. Data center players are using a range of improved approaches, including working directly with utilities partners, vertical integration of microgrids and self-generation capacity, and more comprehensive early coordination with governments and communities.

Under the spotlight

These broader approaches are improving confidence and helping projects move faster, but they also shift significant cost and risk beyond the traditional construction program. It is why, with this report, we continue to explore beyond the simple cost-per-Watt build to look at the wider trends and industry sentiment from a survey of over 400 market leaders. With data centers becoming an increasingly central pillar of global construction demand, the sector is drawing greater interest from the supply chain, financing sources, and the general public. The knock-on impacts are being felt worldwide.

Such a dynamic growth sector, and one which is perhaps uniquely willing to prioritize pace over price, is naturally attracting a greater proportion of investment and talent, drawing in capacity from other areas.

Integrated solutions

To navigate these issues and to match demand in the next phase of the industry’s growth, we will need to continue evolving our ways of working to improve the sector's agility. Traditional approaches of solving cost and schedule challenges individually and incrementally will be unsustainable.

Prioritizing long-term planning, closer partnerships and increased integration across the delivery phase will be increasingly critical to limit risk and capture the huge opportunities the AI revolution is bringing.