Top 10 influences on the data center market in 2024-2025

There is almost universal agreement that the data center market is growing rapidly. According to Jennifer DiMambro, global and US leader for science, industry and technology at Arup, twice as much data will be generated in the next five years as in the last decade.

According to Darius Shroff, NCARB, CDT, LEED AP BD+C, project manager, HDR, the data center market is expected to reach over $340 billion in 2024, with revenues growing exponentially at a rate of 6.5% – to $438.70 billion by 2028.

Many people agree with market growth forecasts. However, although its development is largely driven by the demand for artificial intelligence (AI), high-performance computing, there are still many limitations hindering the speed of data center delivery.

The impact of artificial intelligence on the data center sector cannot be overstated. From the need to implement alternative cooling methods to the increased scale of projects under construction, artificial intelligence has a hand in almost every aspect.

Here are the top 10 factors currently influencing the data center market:

1. Liquid cooling.

Liquid cooling technologies are the biggest trend in the data center market this year – resulting from the demand for artificial intelligence. Alternative cooling methods such as immersion, direct heat exchangers, and backdoor heat exchangers are becoming common in data center designs because standard air cooling is not suited to the increased power demands.

According to Gabe Clark, AIA, LEED AP, NCARB, principal and data center sector leader at Corgan, the large-scale adoption of liquid cooling “is currently having the greatest impact on data center design and construction.”

The increase in the use of liquid cooling is impacting reference designs due to higher power densities. Building planning and programming, structural load solutions and rack density are also influenced by the need for liquid cooling.

2. Sustainability concerns.

You can’t discuss the impact of AI on the data center market without considering one of its biggest pitfalls: energy consumption.

According to Mark Nakatani, AIA, NCARB, LEED AP BD+C, DBIA, principal and global practice director at Mission Critical, HKS, energy availability is becoming the primary factor limiting market expansion, not geography. This has led to increased concern for sustainability and on-site renewable energy generation and storage.

Some companies, such as Cushing Terrell, are using microgrids and modular energy storage systems to alleviate these concerns, says company principal and chief infrastructure officer Alan Bronec, PE.

According to Aaron Martens, LEED BD+C, vice president and co-business unit leader for Mission Critical, HITT Contracting, others have noticed an increase in the integration of renewable energy sources such as geothermal, solar and wind energy to reduce carbon footprints.

The number of nuclear-powered data centers is also growing. Small modular (nuclear) reactors (SMRs) provide a green alternative to increase steady-state energy production on the grid, making projects less dependent on non-renewable energy sources.

3. Speed ​​to market requirements.

The next universal truth about data centers in 2024? They can’t be built fast enough.

“Customers are demanding partners who can fulfill orders on tight schedules and cost requirements,” says Greg Wimmer, executive vice president and leader of the Data Center business unit at Fortis Construction.

Companies are looking for ways to speed up the design-to-construction process. According to Shroff, alternative delivery methods such as prefabrication and pre-construction, non-standard equipment sourcing methods and strategic site procurement are “critical factors” in setting the schedule.

4. Virtual reality.

In an attempt to speed up the construction process, two companies successfully used virtual reality (VR) to save time and costs.

DPR Construction’s virtual design and construction (VDC) leaders use VR tools to assess the feasibility of large data center projects. According to John Arcello, co-leader of advanced technology market at DPR Construction, the company has found that this helps reduce the costs of rework, information requests and change orders related to functionality issues.

Fortis Construction saved an estimated $3 million on a complex data center project in Singapore by using Resolve software and Meta Quest VR headsets. According to Wimmer, the team prevented millions of dollars in losses in rework costs within three months.

5. Increased site rating.

One of the biggest factors impacting the data center market today is the amount of work that needs to be done. For a company like Arup, there are many potential sites being evaluated for future data center construction at any given time.

6. More regional opportunities.

Instead of building campuses near dense urban areas, some data centers are moving to rural regions with lower energy costs, cooler climates and lower network latency. These areas also typically favor on-site renewable energy production and can meet the increased energy demands of an AI-enabled data center, Martens says.

However, there are still some regions where data centers are growing much faster than others. According to Sean McNamara, manager of pre-construction services at Performance Contracting Inc, Northern Virginia, Ohio and Oregon continue to see significant growth.

In fact, much of the money spent on data center development ended up in central Ohio. According to a Newmark report on the U.S. data center market, the combination of large tracts of commercial land and cheap electricity has provided large companies such as Google, Amazon and Microsoft with an advantageous place to build data centers.

7. Supply chain challenges.

Supply chain issues continue to delay the purchase of necessary equipment. According to Arcello, generators, chillers and transformers continue to impact construction costs and schedules. Distribution components such as bus tracks, pipelines and copper wires used in data centers increase lead times.

“We saw equipment delivery times exceeding two years,” says Jim Gikas, LEED AP BD+C, CEM, CBCP, ATD, managing director at Vanderweil.

8. Data hall density.

Today, in many data center designs, the main focus is on proper power distribution and cooling of high-density racks. According to Mortenson Data Center Solutions leaders Darin Knapp, vice president and general manager, and Steve, because artificial intelligence workloads—particularly those related to deep learning—demand significant computing power, data centers must be built to be smaller in footprint and equipped with larger cold rooms. Knighton, vice president and general manager.

While Bronec believes there is no certainty about end-user power density, innovative design solutions need to be developed to accommodate the complex (and perhaps unknown) needs of AI.

According to Arcello, building designs are changing as equipment is moved to the yard, as campus space expands, and GPU clusters require increased connectivity to the fiber network.

9. New players in the space.

With the sector hot and booming, many new players are entering the data center market. An increasing number of capital investment firms, developers and service providers with minimal industry experience are entering the data center market due to its growth, Gikas says.

However, Bronec believes it is difficult for data center developers to determine the level of investment because electrical services, distribution infrastructure and complex DLC systems for such large power levels are very expensive.

10. Scale and scope.

Overall, data center campuses are getting larger than ever before. Some projects aim to “divide and conquer” by distributing data center needs in strategically located and designed locations, rather than building a universal, hyperscale data center, Bronec says.

Investments in multi-building campuses to meet the demand for artificial intelligence are becoming increasingly popular. According to Arcello, some companies, such as DPR, have seen power demand “in the range of 200-400 megawatts.” For others it is higher, as Brian Schafer, principal of Highland Associates, envisions one-gigawatt campuses with individual buildings in the 500-megawatt range.