The evolving data centre construction market

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Building restrictions, energyrestraints, materials costs and changing technologies are all issues and potential obstacles to successful deployments of data centre building projects. Antony Savvas looks at how the industry is coping

There are and have been data centre building restrictions in the Netherlands, Singapore and parts of China, for instance, for environmental planning and/or power availability reasons. There are also proposals to restrict data centre building in Frankfurt, Germany, for planning and power reasons, and for power reasons in Ireland.

There has also been a sharp increase in US steel prices recently that will have an effect on data centre building costs in that market and elsewhere. And globally, both building and labour costs continue to rise.

In addition, the European Union has just outlined lower carbon targets for business, which are expected to affect the data centre building industry.

So how are companies mitigating these circumstances regarding their expansion plans – and can they?


Rebecca Best, director for cost management and hi-tech manufacturing at construction project consulting firm Turner & Townsend, says: “The global pandemic has impacted both supply and demand in the construction sector as a whole. We saw a dip in data centre construction activity at the start of the Covid-19 crisis, which was in tune with the fall in material production.

“However, the sector was seen as critical, and while construction activity has soared as a result, material production has lagged behind. It is this pent-up demand that has led to price increases.”

She says there had been big material price increases for steel, copper, aluminium, timber and cement. Global steel prices have more than doubled in the past 12 months in Europe and the US, she adds, and copper prices sat at around $10,000 per tonne earlier this year (May 2021 on the London Metal Exchange) compared with $5,500 a year before.

As well as price increases, long lead-in periods are affecting data centre programmes, Best says, especially the supply of equipment such as generators.

Roy Gibbens, executive director for sales and marketing at Ark Data Centres, says of the overall supply problem: “We work closely with our supply chain – in some cases we have booked time in manufacturing schedules for certain components years in advance, to ensure that products are available when we need them.”


While there’s not much that can be done about the price of raw materials on an open market, Best believes the data centre industry can do its bit when it comes to sustainability.

She says: “The requirement for more internet data storage as a result of more web-related activity and homeworking has increased awareness and ambition to decarbonise data centres.

“In response to the environmental agenda, the sector continues to invest in new technology such as liquid immersion cooling and underwater data centre test projects to reduce cooling costs, and hydrogen fuel cells/flow batteries to power back-up generators in lieu of diesel.”

This comes on top of the general ongoing industry dash towards green power supplies, with energy derived from PVs, wind farms and tidal power instead of relying on fossil fuels.

Many key data centre companies – along with trade associations – located in the European Union have also signed up to the EU-supported Climate Neutral Data Centre Pact, which is a pledge to be climate neutral by 2030.

Specific actions such as lower power use effectiveness (PUE) targets feature in the Pact, with an annual target of 1.3 for new data centres operating at full capacity in cool climates by the beginning of 2025.

Planning restrictions

But while it is clear to many that efforts are being made in response to climate concerns, the data centre industry is still having to contend with tight planning restrictions and rules in a growing number of areas.

Alex Reid, co-founder of Reid Brewin Architects, says: “What we are seeing in mainland Europe is a tightening of the environmental constraints and rules around the sites – notably in terms of the reuse of waste heat, the minimum use of water for cooling and rules related to greenfield sites generally. This puts enormous pressure on the feasibility studies of such constructions.”

Regarding perceived and potential power shortages in some markets, Reid says some data centre firms are getting in quick before the opportunities dry up.

He says: “Power shortages have increased land value in areas with a guaranteed supply. Therefore, data centre providers are pushing to purchase multiple sites to ensure future supply – a ‘land grab’, if you will.

“In France, for instance, we are seeing companies paying fees as quickly as possible in a bid to reserve the power supplies.”

Ark’s Gibbens confirms what Reid is saying about having to be fast on securing power. He says: “Power shortages are a real issue. In some locations power needs to be reserved before a site has even been purchased, in order to avoid a delay of several years for utility supply when the facility is constructed.”


On the availability of construction skills, and whether the position is getting worse, Gibbens says: “There are shortages from project management and construction experts through to electrical and mechanical engineers. It can be difficult to source the labour required, and to keep projects on track some skills are held on retainer so they are available when required.”

One way that Ark Data Centres is addressing this issue is to work with university technical college UTC Heathrow in London. Gibbens says: “We influence courses to ensure that they are more aligned to the data centre industry. We will provide work placements for students as they undertake their courses, while ensuring their skill set is relevant and applicable when they complete their studies.”

Brandon Oliveri-O’Connor, head of sales for EMEA construction management software firm Procore, says that once projects actually manage to get the skills and materials they need together, more care has to be given to make sure they are efficiently used.

He says: “Data centre builds are more complex than ever. From cooling systems to energy use and security, the construction is highly specialist work. Adding to this, global supply chain disruptions are currently making cost and product delivery more challenging.

“It’s vital for both operators and contractors to be able to ensure visibility into their supply chain and financial performance – ensuring that both are available in real time and that the data coming into the system is reliable.”

Traditionally, operators and contractors have had to reconcile data from different systems, which has made it challenging to achieve a single view of material supply, skills and project progress, so maybe more investment is needed here to make projects successful.

New markets

With all these increasing pressures on construction, Data Economy wonders whether the main European data centre markets of Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D) are now facing serious competition from elsewhere in Europe – are construction factors connected to power availability and tighter planning requirements coming into play across these oversubscribed areas?

Will King, managing director of data centre research firm DC Byte, says: “The main data centre markets across Europe remain the largest and are continuing to see strong growth. For instance, Dublin, which is the largest hyperscale self-build market in Europe, currently has 277MW under construction.

“Although we are now also seeing growth start to accelerate in newer markets – for example, Milan (36MW under construction), Warsaw (24MW), Madrid (63MW) and Zurich (48MW), to name but a few – if we add the MW under construction across these four regions, it only amounts to 171MW.

“Although it is fair to say we are seeing growth in other markets, the core markets remain the largest drivers of growth in terms of new supply, with almost a gigawatt (810MW) under construction.

“Overall, it’s too early to tell whether tighter planning legislation will have a greater impact in the longer term, though,” says King.

Top performer

With all the current and potential problems, though, the bottom line is that the data centre construction industry can now be seen as the top-performing sector internationally, when measured by activity.

Turner & Townsend’s recently-published International Construction Market Survey 2021 reports that data centre construction is now the number one building activity this year, jumping from eighth place in 2020.

The building of data centres now outstrips that in transport (road, rail and ports) – last year’s number one – and the segments in industrial, manufacturing and distribution; residential and social housing; corporate occupiers (office fit-outs); education (schools and universities) and major mixed-use developments, along with 10 other major segments.

Some may well say that a number of those other segments deserve to be ahead of data centres to deliver core social needs. But what can’t be said is that data centre firms have let a pandemic stall their plans to meet the demand for more data storage and management, as a result of the wider spread of cloud services and greater remote working.