DCD>Survey: Construction
Exploring attitudes and trends to data center construction in 2024
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On behalf of DCD and Procore, we’re delighted to welcome you to the results and analysis of our recent survey, looking into the construction market for building out your data center network in the age of AI
The rise in demand for AI-enabled services has marked a sea change in the data center industry. As we all rush to keep pace, there are a number of potential showstoppers facing organizations looking to build out their infrastructure. Lead times for equipment have lengthened as manufacturers ramp up production, and increasing regulation on sustainability is causing delays as authorities deal with issuing permits. Meanwhile, aging power grids are groaning under the weight of supporting AI-enabled facilities.
Nevertheless, our penchant for low latency, high performance data center services shows no sign of abating, making build out an essential piece of the puzzle when it comes to creating a seamless digital experience.
In this survey, we hone in on some of the trends, attitudes and pain points the industry is currently experiencing when it comes to new data center deployments, providing actionable insights and analysis to help you plan your next project.
How well has data center construction been able to keep up with demand over the last year?
Analysis
A tentatively positive outlook from our respondents suggests that all but a few have managed to keep up with the seismic shifts of the past two years. However, as the intensity of workloads increases, with more AI-enabled applications coming on-stream daily, this is a time to prepare for the future, not rest in complacency. The challenges will continue, and many smaller facilities will be pushing to the edge of their redundancies by now, with consolidation and upgrades required for continued success.
Suggested actions
Plan early
Supply chain and labor issues are just two examples of how your best-laid plans can come to a screeching halt. Planning your strategy should come with research into potential showstoppers, especially where there is already an abundance of data centers, which could limit power availability, or in remote locations, where materials and labor could present challenges.
Pick your partners
It takes a village – and the earlier you get your strategic partners involved, the more they can help. Working with the right partners on building design can garner efficiencies you haven’t thought of, and partner expertise can reveal potential issues and delays that could have been missed otherwise.
Aside from power availability and access to renewables, what are the most important factors in site selection today?
Analysis
The wide spread of answers here reflect the varied challenges facing data center operators. With the issue of workforce featuring just as strongly as financial factors such as capital and incentives, this speaks to the ongoing challenge of training and development in the data center industry, especially in developing markets. Regulation is also a notable factor. The days in which the self-regulating data center industry prevailed are being replaced by a patchwork of local laws, often around sustainability, and our results suggest that this is influencing the location of new build projects.
Suggested actions
Check the regulations
The days of the self-regulating data center industry are long gone, and federal/local regulations can be different at a granular level. Make sure you are across the exact rules for your first-choice locations. Local knowledge is power.
Latency matters
With self-driving cars and remote surgery just two examples of applications requiring zero latency, consider your location in terms of the audience it serves and the type of traffic you intend to take over the entire lifespan of the facility.
of workforce/skills
Where has the majority of your construction taken place over the past year?
Analysis
The continued dominance of Tier I markets is an inevitability of the insatiable demand for data in developed markets. However, the emergence of Tier II as a significant player speaks both to the growth of data consumption in these markets, and the need for ‘overspill’ to serve often saturated Tier I locations.
Suggested actions
Match load to location
For facilities used for functions such as cold data storage where issues such as latency are less important, consider moving traffic to a cheaper Tier II or III location, which may have considerable cost benefits without any noticeable degradation in service.
It’s not a status thing
For most people outside the industry bubble, the location of your data center doesn’t matter. The status of having a data center in a Tier I location is overshadowed by the huge constraints it can bring in terms of power generation, labor costs, and regulations.
Which of these traditional Tier II markets will experience the most growth over the next year?
Analysis
As our respondents were all North American, it is not surprising that the majority of answers were close to home. In a global survey, we would expect to see a more varied set of results. EMEA is conspicuously absent from our respondents, suggesting that perhaps this region is approaching saturation, while the relatively untapped markets of Latin, Central and Southern America (LACASA) could see an excellent overspill opportunity where building in the US is not possible. The relatively low number of responses for the Asian market may be an anomaly. We expect significant growth in this market, both in terms of new players and expansion by established data center operators.
Suggested actions
Watch the market
With this question being open ended, many of our respondents suggested that location was not the primary influencer when answering. Many cited environmental, traffic load and other factors as deciders for expected expansion. Keep an eye on your desired market/s.
Consider new markets
The responses from our North American respondents suggest staying closer to home is the expectation – but should you be looking to expand internationally? See where your traffic is flowing from and to – you could be surprised.
How have your construction costs changed over the past year?
Analysis
None of the respondents to our survey suggested a decrease in costs at any level, whilst the vast majority have seen an increase. The reasons for this are myriad, but the global economy has seen significant inflation in recent years, coupled with a shor tage of skilled laborers for construction, and ever more stringent environmental targets, both of which come with significant price tags.
Suggested actions
Look at why
Why did your construction costs increase? It could simply be the state of the global economy, but there are a number of other factors that can put a dent in your budget, such as unexpected obstacles to a retrofit, or permits for access to construction vehicles across non-public land. Consider partnering with a project management company that is familiar with the lay of the land, both literally and in terms of local regulation to help streamline the process. The earlier you involve an experienced third party the lower the risk of unexpected costs and delays.
Prepare for greener
Environmental sustainability goes beyond running the data center, it starts with green construction. This could work out cheaper through reusing, upcycling, and retrofitting, but premiums exist on materials such as recycled concrete and clean fuels for construction vehicles. Work them into your budgets, as although this kind of investment won’t glean immediate returns, the use of greener materials in your build will appeal to prospective customers and could give you the edge over a competitor.
Which of these will have the greatest positive impact on speed of deployment over the next year?
Analysis
Modular construction has been a major boon to the data center industry, allowing operators to grow at their own pace, without the need for expensive downtime or disruptive retrofitting. We expect this phenomenon to continue to increase. The significant showings for remote testing and real-time data on builds suggest that visibility is an important consideration for businesses embarking on construction projects. The pandemic has led to more functions, such as testing, being conducted remotely and we would expect that trend to continue.
Suggested actions
Go modular
The benefits of a modular rollout are myriad. They allow your data center to be equipped in stages to spread the budget and expand as demand continues to increase. Beware of vendor lock-in – choose a universally modular system if possible.
Use what you sell
Most of the answers to this question relate to the exact types of traffic that your facilities will be carrying, so make sure you look at how you can leverage them too.
Remote (virtual) commissioning & factory acceptance testing
Automated real-time visualization of projects in progress
Modular construction & multi-track scheduling
Virtual reality & digital twins
Use of AI in design & build management
Use of robots for simple, repetitive tasks
Where is the construction skills shortage most prominent?
Analysis
Mechanical and electrical expertise are two of the most vital for any data center build, and the challenge in finding such labor, representing nearly half of all our responses, suggests that the labor shortage is a long way from recovery. There is a lot of scope for experienced construction workers and engineers to become educators, particularly in markets where there is limited opportunity for formal qualifications, with staff being trained and mentored on the job and supervised by a limited pool of qualified high-skill workers.
Suggested actions
Be part of the solution
More firms are looking to apprenticeships and development programs, with a particular eye to underserved communities such as women and ethnic minorities. Widening the talent pool could be the key to not only helping to close the skills gap, but foster a more inclusive industry as a whole.
Boots on the ground
If you’re building in a new location, find a partner who has contacts in that area. They will be able to assist with recruiting the right team with a local insight that you can’t emulate from thousands of miles away.
Which of these is having the biggest impact on the way your data center is designed?
Analysis
It’s no surprise that AI and denser workloads are the biggest share of responses – it has been the story of the data center over the past two years. However, it is worth noting that sustainability and energy efficiency also figures strongly, and this is likely to increase in importance in the coming years – as we approach the 2030 deadline for carbon neutrality being targeted in many territories. All these factors play into data center operators’ ability to build out quickly, with the limited power provision in some key areas also playing a part.
Suggested actions
Think AI
Even if you aren’t carrying AI workloads right now, you more than likely will be before too much longer. Assuming you will be and designing accordingly will future-proof your facility – retrofitting liquid cooling, for example, is time-consuming and expensive.
Plan to exceed current sustainability targets – they are only going to get stricter as the world moves towards carbon neutrality, and once again, retrofitting these features can be far more expensive later. Go greener
To what extent are you building to accommodate high-density workloads in your data center(s)?
Analysis
There’s no real surprise that our respondents are looking toward a high-density future, with consumption continuing to grow, so too is the need for densification to increase capacity. However, densification can only get the industry so far, and new facilities are likely to figure strongly in roadmaps for sometime to come. It is important that these new data centers are designed with some levels of redundancy to protect them from further shocks in data traffic.
Suggested actions
Be sure
If you know that your data center will only ever carry, for example, historical financial transaction data, or cold store fitness data from wearables, you can safely build a low-cost, air-cooled data center. If you’re not sure, that probably means that “hot”, east-west, highdensity workloads feature in your future. Plan accordingly.
Match your portfolio to your workload
Not everything needs to be liquid-cooled, identify which of your workloads are likely to need it both now and in the future. You might discover a hybrid solution is the best course of action. And whilst futureproofing is important, spreading your workloads to data centers appropriately can be a cost-effective way of building out your business.
Have you carried out any retrofit projects over the last year?
Analysis
Retrofitting is a crucial tool in allowing data center operators to utilize facilities for their whole lifespan. The vast majority of our respondents have either retrofitted, or planned to –demonstrating the significant change they have seen with the launch of AI-enabled versions of many of the world’s most popular tools and services. Retrofitting is more complex and therefore costly than designing a data center to reflect the needs of the coming decades, and it is vital, therefore, that as centers reach their end-of-life, they are replaced by futureproofed, scalable, modular data centers that are fit for the next data revolution. On the other hand, the reduced embedded carbon in retrofitting or repurposing existing buildings can significantly reduce environmental impact issues.
Suggested actions
To retrofit or not to retrofit?
Do a cost-benefit of retrofitting/densifying your data center over relocation. It could work out favorably depending on a wide variety of factors, from downtime during the construction to incentives offered by new markets for relocating.
Fit smart
Tearing holes in the wall or lifting the raised floor might not be necessary. Look at options like suspending ceilings and external power supplies to ease the burden on floorspace which needs to be prioritized toward potentially footprint-heavy liquid cooling.
What
are the longest construction delays that you have experienced over the past year?
Analysis
Deciding to expand facilities is only half the battle. Demand on labor during a skills shortage, lead times for high-demand equipment, access to the power network, and delays in permitting are just some examples of the potential outside factors that can put a new build project months behind schedule. It is important, therefore, that all stakeholders are engaged early to provide guidance on realistic timeframes, and potentially offer solutions to shorten them.
Suggested actions
Check your lead times now
There’s no point putting together a project timeline only to discover that there’s a 20-month waiting list on a particular chiller unit. Many suppliers are experiencing delays due to the sheer demand for their products. Work that out with your partners on day one, or ideally sooner. Increasingly companies are pre-ordering products before they have a blueprint ready, as they know it will be needed and that lead times are long.
Do the paper work
Many projects are delayed by red tape before spades can go in the ground. Work with local and federal authorities to make sure that when your construction crew turns up to break ground, everything has been made ready, including things like site access and permits.
To what extent do you agree or disagree with the following statements?
‘Grid power is the biggest inhibitor to building at scale’
Analysis
As we can see from our respondents, it’s no secret that grid constraints are one of the biggest barriers to building at scale, particularly when doing so for the AI era. Not only do these AI workloads require more power, but they will be a far cry from the relatively flat, consistent workloads data centers have historically managed, with unpredictable power surges a very real possibility. This has of course had an impact on the way we design – and retrofit – data centers going forward, with a focus on improved energy efficiencies and increased resiliency/redundancy.
Suggested actions
Have you got the energy?
If your local energy supplier is struggling to meet demand, consider renewable energy sources of your own such as microgrids, or look into generators and turbines. Any excess can be sold back to the grid, harboring good relations for your future plans, and potentially reducing TCO. If a microgrid isn’t an option, consider reconfiguration. Assess how best to maximize existing power capacity to deliver the low latency that AI demands. This, in tandem with increasingly stringent sustainability targets and regulations will be a defining factor in reconfiguration strategies going forward.
Invest in better
Improving power distribution systems will help to minimize losses, ensuring that power is delivered to servers in the most efficient way possible. Consider additions such as advanced power distribution units, intelligent management and high-efficiency power systems, alongside renewable energy sources, to enable a reduction in both energy costs and carbon emissions, while diversifying power sources to provide the secure and plentiful power AI needs to thrive.
‘AI & high-performance computing is having the single biggest impact on data center design’
To what extent do you agree or disagree with the following statements?
‘The increasing dominance of Tier II markets will start to fade as training moves to inferencing’
Analysis
One of the greatest challenges is that AI is not a homogeneous entity, rather it is a technology that is split into two distinct phases: training and inference. Successful data centers will learn to adapt to both. AI training will require less focus on resilience and redundancy, and more on cost, PUE, and general efficiency. Inference however, is very latency sensitive, requiring proximity to a metropolitan hub to ensure quick response times for user interfaces and applications. When it comes to scaling up at speed, sustainability of course becomes more challenging. But by embracing advanced cooling techniques, complying with evolving regulations, and championing sustainability at every opportunity we have every opportunity to thrive in this new era of technology.
Suggested actions
Distance yourself
Finding remote locations for AI training to take place, so that it doesn’t cannibalize the workloads of inference-heavy metropolitan areas, is one method that will prove extremely valuable going forward.
A fluid transition to liquid cooling
Although air cooling will still exist for years to come, a transition from air to liquid cooling will become the preferred and necessary solution for data centers to cope with AI clusters effectively. From improved processor reliability and performance to space savings with higher rack densities and more thermal inertia with water in piping, liquid cooling increases energy efficiency, improves power utilization, and reduces water usage.
‘It’s not possible to build out at speed for AI and be sustainable’
Analysis
The biggest challenge facing data centers right now is that multiple, critical factors have all hit concurrently. The AI revolution has triggered a sudden need for additional capacity, where nobody can accurately predict exactly how much – or when – data centers will require the additional heft demanded by AI and HPC.
On top of this, there are uncertainties and inconsistencies in the way sustainability targets are regulated, which varies from region to region and even city to city. For the first time in its history, the data center industry’s self-regulation is being superseded by federal and local requirements, each with its subtleties, making local knowledge of new markets essential.
As manufacturers struggle to ramp up to meet these demands, lead times for equipping both green and brownfield facilities are getting longer, at a time when the need for speed is more paramount than ever. As operators are often pre-ordering equipment before they’ve even found a site, it’s important to make sure operators are aware of potential delays.
Compounding the issue(s), the ongoing skills shortage means that finding the talent to carry out construction and fit out server halls is a challenge. We’ve seen a number of businesses moving to diversify the talent pool, with an eye to bringing aboard more female engineers, and encouraging uptake from minorities through apprenticeships, training programs, and tie-ups with academic institutions. We hope this trend will continue, to bring much-needed new perspectives and skills to the industry.
Finally, the ‘power crunch’ has led to a situation where operators are having to consider solutions beyond the grid, not just in order to create a more sustainable facility, but to keep the lights on at all. We expect to see a rise in the use of microgrids, as well as alternative energy sources to allow for on-site generation, which offers the chance to feed back into the grid, fostering good relations with utilities, a key partner in the movement toward increased AI adoption.
While some markets have become saturated, there’s an increasing eye toward Tier II markets, which can offer advantages in terms of better power provision and access to labor forces. However, it’s important to bear in mind that for the high levels of east-west traffic now being catered for, these Tier II locations may not provide the low latencies required to serve Tier I markets.
Another prominent improvement is the continuing move toward modular facilities, which greatly increases options for retrofitting, and for building out at pace, in restricted spaces. We can see a lot of engagement with this approach, and we expect that to continue as people see the benefits of using rooftops and campus perimeters to expand their available footprint.
The key takeaway from our respondents is that planning ahead will be vital over the coming years. Choose the right partners and involve them at the drafting table stage. It really does “take a village” to future-proof a data center and the earlier you involve experts in aspects such as power provision, and engage equipment manufacturers to establish lead times, the more they can help.
Final thoughts
Theres little doubt that the opportunities being created by the explosion of new higher density workloads are matched by the headaches in accommodating them as fast as consumers and businesses alike are taking them up. Constraints on power, the need for sustainable thinking, rising costs, labor shortfalls, and long lead times for equipment all play into a picture where supply and demand have fallen off-balance.
The key takeaways are that data center operators need to think outside the box in terms of where they locate, considering issues such as grid capacity and local regulations at a granular level.
Involving your partners at the drafting stage can pay huge dividends as, depending on who you choose, they can offer inside information from their own experiences, and creative solutions to some of the big headscratchers. In short, be open-minded, be lateral, and design around your predicted needs for your facilities’ end-of-life, not the first day of operation.
