Oracle, Google and Meta lead data center construction surge

Overview: The boom in data center construction continues across the United States as major hyperscalers add even larger projects to their pipelines this year. Examples include Oracle's recently announced $10 billion data center expansion plan and the opening of a new $1 billion data center in Kansas City, Missouri and a $576 million data center in Cedar Rapids, Iowa. Includes Google's announcement. Meta recently selected Minneapolis-based Mortenson to build a new $800 million data center in Rosemount, Minnesota. Industry observers say demand should continue to grow as companies strive to automate processes and workflows. According to CBRE's March 2024 report on data centers, digital transformation will accelerate the need for processing power, storage, and cloud services, thereby providing a strong driver for sustainable data center construction. Dive Insight:

According to CBRE, in the primary market, data center construction in the second half of 2023 reached a record high of 3,077.8 MW, an increase of 46% from the previous year.

The largest increase in construction was in the Atlanta area, with 732.6 megawatts under construction, an increase of 211%. For example, Microsoft recently paid $6 million to acquire approximately 21 acres of land near its existing Palmetto data center campus in Fulton County, Georgia, according to the Atlanta Journal-Constitution. .

Additionally, pre-leasing activity, an indicator of the balance between demand and supply, is at a high level of 83%, according to CBRE.

Construction and pre-leasing in the primary market hit record high

Activity, measured in megawatts, has skyrocketed over the past three years.

Obstacles in the supply chain

However, supply chain issues continue to cause headaches in data center construction.

Issues with the procurement of generators, power systems, power distribution equipment, and distribution equipment often delay the construction schedule of these projects. According to related builders and contractors, construction input prices recently increased by 1.4% in February, mainly due to the impact of lingering inflation.

But despite power availability delays and rising construction costs, construction activity in the primary market should still reach a record high of more than 2,500 megawatts in 2024, according to CBRE.

Larry Ellison, chairman and chief technology officer of Austin, Texas-based tech giant Oracle, said his company's data center projects typically take longer to build than we would like, but the company He asserted that these new projects continue to improve construction efficiency.

Growing data center construction market

According to International Data Corporation, the global AI software market is expected to grow from $64 billion in 2022 to nearly $251 billion in 2027, at a compound annual growth rate of 31.4%.

This will encourage new markets across the country to set up large data center campuses, such as Wisconsin and Indiana. According to CBRE, these states will promote implementation of these projects due to tax incentives, advances in renewable power, transmission and distribution infrastructure, and affordable power supply.

For example, Meta selected New York City-based Turner Construction to build its $800 million data center campus in Jeffersonville, Indiana. The project qualifies for the state's data center sales tax exemption, according to the Indiana Economic Development Corporation.

Elsewhere, Chicago-based Walsh Construction recently broke ground on Microsoft's $1 billion data center in Mount Pleasant, Wisconsin. According to the Racine County Economic Development Corporation, the project is eligible for Electronics and Information Technology Manufacturing District designation. This is a Wisconsin program that exempts construction work within such districts from sales and use taxes.

Sources 1/ https://Google.com/ 2/ https://www.constructiondive.com/news/oracle-google-meta-data-center-construction/711408/ The mention sources can contact us to remove/changing this article

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