IHS Markit: Global data center construction continues to grow

Amazon, Google and Microsoft are the leading the way in building new data centers, according to IHS Markit's research. (Pixabay)

If there is indeed a global recession in the offing, no one has told the top cloud and colocation providers. Global data center construction is booming, as the leading cloud and colocation providers will add an estimated 14 million-square-feet of capacity this year, according to a report by IHS Markit.

In addition, another 4.5 million square-foot of capacity is already in the works for the first half of next year. IHS Markit is currently tracking 135 new data center building and expansion projects that are slated to finish this year.

The growth this year and next year follows on the heels of 52 new building and expansion projects that came online in the second half of last year that accounted for 3.6 million square feet.

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In its first quarter earnings call, Google CEO Sundar Pichai said the company would invest more than $13 billion throughout the year in data centers and offices across the U.S. with major expansions in 14 states. Google has announced data center expansions or new builds in Oklahoma, Texas and Finland so far this year.

The top-ranked cloud providers ranked by IT-operated data center square feet are Google at 13.7 million, Amazon at 12.4 million, Microsoft at 10.7 million, IBM at $3.4 million, and Tencent at 2 million.

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“Cloud expansion and enterprise colocation adoption are continuing to drive the majority of new capacity additions in the data center market,” said Alan Howard, principal analyst at IHS Markit, in a statement. “The period-over-period spikes we are seeing in capacity additions are a natural part of the deployment and absorption phases of the data center construction cycle.

"The data center expansion amongst cloud providers has been at a break-neck pace for the last two to three years to keep up with anticipated demand. Planned data center expansions we are tracking, for both cloud and colocation providers, appears to be maintaining its momentum over the next 18 months. For cloud providers specifically, they have large campus plans announced spanning the next five years.

Howard said in an email to FierceTelecom that the majority of new data center construction from cloud providers is coming from Amazon, Microsoft, and Google, and that the bulk of that construction is campus builds with multiple data centers on the same property.

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IHS Markit's report also said that despite the heat of the desert environment, Phoenix has become a literal hot spot for data-center building activity. In recent months, Compass Datacenters, Stream Data Centers, Vantage Data Centers, Microsoft and Google have bought more than 700 acres of land—or more than 30 million square feet—for new data center campuses.

“Intuitively, a hot climate like Phoenix doesn’t seem to be conducive to economical data-center operations,” Howard said. “However, the growth of the Phoenix market is being driven by reasonable power prices, more efficient cooling, solid tax incentives, regional network connectivity and an exceptionally low risk of natural disasters.”

Northern Virginia and the Toronto metropolitan areas have traditionally been some of the biggest locations for data center builds. Howard said that Santa Clara, Calif., was also a focal point for data center builds despite the high cost of land. 

Portland and Hillsboro, Oregon, are also a significant data center market, which is largely, although not exclusively, due to no sales tax, moderate climate and reasonable power rates, according to Howard.

On a global level, Howard said that the Middle East and Africa and Latin America were regions to watch going forward.

"There seems to be growing interest in these regions," Howard said. "What I find of interest, also, is a seeming lack of interest in Eastern Europe."