The market for data centre construction has experienced growth from 2015 onwards. The market performance has been positive in recent years, with a strong take up of space within the co-location sector from late 2015 onwards. The commercial sector has experienced the greatest level of growth, boosted my major data investments from global players in the past two years. In contrast, expenditure in the public sector has fallen slightly as the Government’s cloud-first policy has led to increased outsourcing and use of wholesale and co-location providers to reduce its IT expenditure.
In 2016 and 2017, the data centre construction market benefitted from major investment decisions from Amazon Web Services, Microsoft and IBM. In 2017, Google opened a data centre in London to improve its cloud offering. In addition, there are several major new data centres being developed across the UK, which should provide further impetus to the market in the next year or two.
Demand for data storage is being driven by the increasing levels of online activity, huge growth in the number of connected devices and changes in the way online services are delivered, with a growing adoption of cloud computing technology. Increasing cloud take-up is supporting the growth of the commercial and co-location sector, as it reduces the need for businesses to own and maintain their own IT infrastructure.
In terms of contractors, the data centre market is very fragmented. While most large M&E contracting businesses are key players, companies involved in data centre construction range from major building contracting groups and commercial developers, to data centre specialists and operators, modular building manufacturers and IT equipment suppliers.
Going forward, indications are that construction output within the data centre sector will rise consistently from 2018 onwards, driven by steady overall construction output, but primarily by underlying factors driving greater IT and internet usage. The commercial sector is expected to drive construction growth, while the trend towards outsourcing data centre services from both the public sector and private businesses is likely to lead to relatively modest growth in these sectors.