Data Center Construction Market Size (2025-2030)

The Data Center Construction Market was valued at USD 260 billion and is projected to reach a market size of USD 372 billion by the end of 2030. Over the forecast period of 2025-2030, the market is projected to grow at a CAGR of 7.42%.

The data center construction market encompasses the planning, design, and building of facilities that house computing and storage infrastructure. These centers are critical to supporting global digital services, cloud computing, and enterprise IT operations. The market includes various components such as electrical systems, mechanical cooling, and physical infrastructure. Demand is driven by rapid digitization, AI workloads, 5G deployment, and rising internet traffic. Hyperscalers, colocation providers, and governments are key players investing in large-scale facilities. Construction practices are evolving to prioritize energy efficiency, modularity, and scalability. Regulations around carbon emissions and data sovereignty are also shaping design and location strategies. The market spans a wide range of industries including finance, telecom, healthcare, and e-commerce.

Key Market Insights:

Hyperscale data centers accounted for over 40% of new construction projects globally as of 2023. Companies like Amazon, Microsoft, and Google continue expanding aggressively, with some campuses exceeding 100 MW capacity. This trend is transforming rural and suburban areas into digital infrastructure hubs.

Electrical infrastructure, including UPS systems, switchgear, and power distribution, comprises approximately 35%–40% of total data center construction costs. Reliability and redundancy (2N or N+1 configurations) are core design features. This segment remains dominant due to increasing rack densities and the need for uninterrupted power supply.

As of 2023, Tier III facilities made up over 55% of operational and under-construction data centers. They strike a balance between performance, cost, and maintainability, supporting 99.982% availability. Most enterprise and colocation providers prefer Tier III for its concurrent maintainability without Tier IV’s higher costs.

The Asia-Pacific region, led by China, India, and Southeast Asia, has emerged as the fastest-growing area for data center construction. It captured over 30% of new project investments in recent years due to cloud adoption, mobile usage, and favorable government policies. Land and energy availability in secondary cities further support expansion.

Modern data centers target a Power Usage Effectiveness (PUE) of 1.2 or lower, down from averages of 2.0+ a decade ago. Operators are investing in liquid cooling, renewable energy, and heat reuse systems. These features not only reduce OPEX but also align with ESG goals and regulatory pressures in Europe and North America.

Data Center Construction Market Drivers:

Surge in Cloud Computing and AI Workloads

The exponential growth in cloud services, SaaS platforms, and AI applications is driving demand for scalable, high-performance data centers. Hyperscale providers are expanding infrastructure to handle compute-intensive workloads like generative AI and large language models. This trend requires specialized construction to support high-density racks, GPU clusters, and advanced cooling systems. As businesses migrate to the cloud, data center demand continues to rise globally.

Expansion of 5G and Edge Computing

5G rollout is pushing data processing closer to end users, increasing the need for edge data centers in urban and remote locations. These facilities require new construction models focused on compact, modular, and low-latency infrastructure. The proliferation of connected devices and real-time applications such as autonomous vehicles and IoT is accelerating this shift. As a result, both hyperscale and micro data center projects are growing in parallel.

Regulatory Compliance and Data Sovereignty Requirements

Governments are introducing stricter regulations around data localization, cybersecurity, and energy efficiency. Organizations must build data centers in specific regions to comply with laws like GDPR in Europe and similar mandates in Asia and the Middle East. This is encouraging localized construction and increasing demand for regional facilities. Additionally, certifications like LEED and Uptime Institute tiers are now baseline expectations, influencing design and construction standards.

Data Center Construction Market Restraints and Challenges:

High Capital Expenditure and Long ROI Cycles

Data center construction requires substantial upfront investment, often ranging from tens to hundreds of millions of dollars per facility. This includes costs for land, equipment, power infrastructure, and skilled labor. The return on investment (ROI) can take several years, particularly for enterprise-owned centers. These financial barriers can deter smaller players and delay project execution.

Power Availability and Energy Constraints

Access to reliable and scalable power supply is a growing challenge, especially in regions with aging grids or limited capacity. High-density data centers can consume upwards of 100 MW, stressing local utilities and raising concerns about grid stability. In some urban areas, construction permits are delayed due to power scarcity. This constraint is pushing companies to seek alternative energy sources or relocate to power-abundant zones.

Skilled Labor and Supply Chain Disruptions

There is a global shortage of specialized labor required for data center design, engineering, and commissioning. At the same time, supply chain disruptions—exacerbated by geopolitical tensions and post-pandemic impacts—have led to delays in key components like switchgear, cooling units, and semiconductors. These factors increase construction timelines and project costs. Ensuring resilience in procurement and workforce planning has become critical.

Data Center Construction Market Opportunities:

The data center construction market presents strong opportunities driven by digital transformation across industries. The growing adoption of AI, machine learning, and big data analytics is fueling demand for high-performance computing infrastructure. Emerging markets in Southeast Asia, Africa, and Latin America offer untapped potential due to increasing internet penetration and supportive government policies. Edge data centers present a niche growth area, particularly in telecom, smart city, and autonomous systems applications.

Sustainability-focused construction, including green buildings and renewable energy integration, opens new business avenues aligned with ESG mandates. Modular and prefabricated data centers are gaining traction for their speed of deployment and cost efficiency. Government investments in national digital infrastructure, such as India's Digital India and Europe’s GAIA-X, are also stimulating regional construction. Additionally, rising demand for colocation and hybrid cloud solutions creates opportunities for both large and mid-tier builders.

DATA CENTER CONSTRUCTION MARKET REPORT COVERAGE:

Data Center Construction Market Segmentation:

Data Center Construction Market Segmentation: by Infrastructure Type

• Electrical Infrastructure
• Mechanical Infrastructure
• General Construction

Electrical infrastructure holds the largest share of the market, accounting for approximately 38% of total data center construction costs. This includes power distribution units (PDUs), uninterruptible power supplies (UPS), switchgear, generators, and backup systems. The increasing need for high availability and redundancy (e.g., N+1, 2N configurations) drives demand in this segment. The rise in AI and high-density workloads is also pushing up power requirements per rack, intensifying the need for robust electrical systems.

Mechanical infrastructure represents around 27% of the market and includes cooling systems, HVAC, racks, and airflow management solutions. As computing density increases, efficient cooling has become critical, with liquid and immersion cooling technologies gaining momentum. Mechanical systems also help control humidity, airflow, and overall thermal performance in the data hall. Operators are now prioritizing low-PUE designs, further boosting innovation in this segment.

Data Center Construction Market Segmentation: by Data Center Type

• Tier 1, Tier 2, Tier 3, and Tier 4 Data Centers
• Enterprise Data Centers
• Colocation Data Centers
• Hyperscale Data Centers

Tier 1 and Tier 2 facilities together hold about 20% of the market, typically serving small businesses or localized needs. These data centers offer limited redundancy and lower uptime (99.671% for Tier 1 and 99.741% for Tier 2), making them more cost-effective but less suitable for mission-critical operations. They are mostly found in developing regions or as edge facilities. However, their share is gradually declining as businesses prioritize higher-tier solutions.

Tier 3 data centers dominate the market with around 55% share, offering high availability (99.982%) and concurrent maintainability. These facilities are widely adopted by enterprises and colocation providers for their balance of cost and performance. They support most standard workloads and are designed to operate continuously during maintenance. Tier 3 remains the preferred choice for both new builds and facility upgrades globally.

Data Center Construction Market Segmentation: by Service Type

• Design & Consulting
• Installation & Commissioning
• Maintenance & Support

Design & Consulting services represent about 20% of the market and involve the planning, architectural design, engineering analysis, and feasibility studies of data center projects. These services are critical in early project phases, ensuring compliance with performance, sustainability, and regulatory requirements. As data centers become more complex and energy-efficient, demand for specialized consultants is growing. This segment plays a vital role in Tier classification, redundancy planning, and cost optimization.

Installation & Commissioning is the largest service segment, accounting for approximately 60% of the market. It includes the actual construction, system integration, equipment setup, testing, and handover of the data center facility. With rising demand for hyperscale and modular data centers, this segment has seen significant growth. Timely and precise execution during this phase is essential to meet uptime requirements and operational readiness.

Data Center Construction Market Segmentation: Regional Analysis

• North America
• Asia-Pacific
• Europe
• South America
• Middle East and Africa

North America remains the largest market, accounting for about 38% of global data center construction activity. The U.S. leads with a high concentration of hyperscale and colocation facilities, particularly in Virginia, Texas, and California. Demand is driven by AI adoption, cloud computing, and digital services across all sectors. Advanced infrastructure, reliable power availability, and supportive zoning laws sustain its dominance.

Asia-Pacific holds around 28% of the global market and is the fastest-growing region. Key growth markets include China, India, Singapore, Australia, and Japan, fueled by rapid digitization, mobile usage, and strong government investment. Regional demand is also supported by expanding tech ecosystems and increasing deployment of edge data centers. However, land, power constraints, and regulatory diversity present ongoing challenges.

COVID-19 Impact Analysis on the Global Data Center Construction Market:

The COVID-19 pandemic had a mixed but ultimately accelerating impact on the data center construction market. Initially, the industry faced significant disruptions due to lockdowns, labor shortages, and global supply chain delays, particularly in the delivery of electrical and cooling components. Many construction projects were paused or slowed, especially in regions with strict restrictions and limited essential worker exemptions. However, the rapid shift to remote work, e-commerce, digital healthcare, and online education drove a surge in demand for cloud services and digital infrastructure.

This sudden need for increased capacity prompted hyperscale and colocation providers to resume or expand construction plans quickly. The pandemic also highlighted the importance of operational resilience, prompting more investment in edge data centers and regional redundancy. Furthermore, long-term demand was reinforced by increased data consumption and digital transformation across industries. As a result, while short-term challenges were significant, COVID-19 ultimately accelerated growth and investment in data center construction globally.

Latest Trends/ Developments:

The data center construction market is undergoing rapid transformation driven by emerging technologies and evolving business needs. One major trend is the rise of AI-optimized data centers, requiring new designs to accommodate high-density GPU racks, advanced cooling systems (like liquid and immersion cooling), and power-hungry workloads. Sustainability and energy efficiency have become central to design priorities, with many facilities targeting net-zero emissions and adopting renewable energy sources. Modular and prefabricated construction methods are gaining traction due to their ability to reduce build time, costs, and onsite labor dependencies. Edge data centers are also on the rise, enabling faster data processing closer to end users, particularly for applications like autonomous vehicles, IoT, and 5G. Additionally, geopolitical tensions and data sovereignty laws are prompting more localized data center construction, especially in Europe, Asia, and the Middle East. Automation and smart infrastructure, including the use of AI for monitoring, predictive maintenance, and energy management, are becoming standard. Increased M&A activity is consolidating the market, with major players acquiring land banks and infrastructure assets to scale quickly. Finally, hyperscale operators are expanding aggressively into secondary markets to reduce latency and meet regional data demands, diversifying beyond traditional hubs.

Key Players:

1. Turner Construction Company
2. AECOM
3. Jacobs Engineering Group Inc.
4. Schneider Electric SE
5. Vertiv Group Corp.
6. Eaton Corporation
7. NTT Global Data Centers
8. IBM Corporation
9. Equinix, Inc.
10. DPR Construction