Hyperscale Data Center Market to Reach $196.39 Billion by 2028


Arizton is pleased to announce its latest report, hyperscale data center market - global outlook & forecast 2023-2028, shedding light on the dynamic and rapidly evolving industry. The comprehensive report unveils valuable market trends, growth opportunities, and a competitive business landscape. With in-depth analysis and meticulous research, this report serves as a strategic guide for industry players, investors, and decision-makers, offering a comprehensive understanding of the current hyperscale data center market dynamics and future prospects. 

Browse 100 market data Tables and 74 Figures spread through 671 Pages and in-depth TOC on "Hyperscale data center market by Infrastructure (IT Infrastructure, Electrical Infrastructure, Mechanical Infrastructure, and General Construction), IT Infrastructure (Server Infrastructure, Storage Infrastructure, and Network Infrastructure), Electrical Infrastructure (UPS Systems, Generators, Transfer Switches & Switchgear, PDUs, and Other Electrical Infrastructure), Mechanical Infrastructure (Cooling Systems, Racks, and Other Mechanical Infrastructure), Cooling System (CRAC & CRAH Units, Chiller Units, Cooling Towers, Condensers & Dry Coolers, Economizers & Evaporative Coolers, and Other Cooling Units), Cooling Technique (Air-based Cooling Technique and Liquid-based Cooling Technique), General Construction (Core & Shell Development, Installation & Commissioning Services, Engineering & Building Design, Fire Detection & Suppression, Physical Security, and DCIM/BMS Solutions), Tier Standards (Tier I & Tier II, Tier III, and Tier IV), Geography (North America, Latin America, Western Europe, Nordics, Central & Eastern Europe, Middle East, Africa, and APAC) - Global Forecast to 2028

View the detailed Table of Content here -

The hyperscale data center market is witnessing a surge in investments from companies specializing in cloud services and telecommunications. This trend can be attributed to colocation providers' and telecom firms' rapid expansion efforts as they construct more regional data centers. Establishing strategic partnerships with leading colocation providers is essential for attracting a broader customer base. Major cloud service players, including AWS, Facebook, Google, Alibaba, Huawei, Tencent, and Microsoft, are setting up data centers across different geographical areas. The future is expected to see even more substantial investments from hyperscale providers, further solidifying their presence in the market. The development of hyperscale data centers is being carried out nearer to cheap power resources. For instance, due to electricity deregulation, most of Apple’s data centers are being constructed in Oregon. In addition, there are promising revenue opportunities and standard procedures for deployment and disciplined project management; this will reduce the construction time required to build a data center by local subcontractors across the major cities. Data center operators usually auction data center development projects, prompting contractors to quote reduced time requirements and low development costs to complete the project. Several hyperscale data center providers prefer four layers of safety for the physical security of their facilities. A few vendors are implementing five or more layers of security due to the increasing demand for services, a significant factor driving the growth of physical security. Data center infrastructure management (DCIM) and building management systems (BMS) have recently emerged as mandatory infrastructure-monitoring solutions for data centers. For instance, Digital Realty’s data centers are monitored with EnVision, a DCIM solution that facilitates heightened visibility into data center operations through a user-friendly interface offering access to historical data and predictive capabilities. 

The US Hyperscale Data Center Market to Reach $23.75 Billion in 2028

In the United States, the hyperscale data center market is divided into four main regions: the southeastern US, midwestern US, southwestern US, and western US, specifically focusing on New York, New Jersey, Pennsylvania, and Connecticut. Here's a summary of key points:

  • The southeastern US is the country's most advanced and mature data center market. North Virginia, known as the data center capital of the world, has a high concentration of these facilities. Other states in the Southeast, including Georgia, Florida, Tennessee, and Alabama, also saw significant data center investments in 2022. Major colocation and hyperscale operators are strongly present in this region, especially in Virginia, and are expanding with new investments.
  • As of the first half of 2022, more than 70% of the demand for data centers in Georgia came from the cloud and IT services sector, followed by BFSI, healthcare, telecom, and retail & e-commerce. The average rental rate for retail colocation (less than 250 kW) ranges between $110 and $135.
  • In Northern Virginia, the cloud and IT services sector drives half of the demand for data centers. The average rental rate for wholesale colocation (1 MW—5 MW) ranges between $80 and $100.
  • The midwestern US is a major area for hyperscale operators, with developments in prime locations such as Illinois, Iowa, Nebraska, and Ohio. This region is expected to grow steadily due to the active investments from major hyperscale operators like Meta (Facebook), Google, Amazon Web Services, and Microsoft.

The hyperscale data centers in the US are strategically located closer to affordable power resources to optimize their operations. An example of this trend can be observed with Apple's data centers, which are being built in Oregon due to the area's electricity deregulation. Lucrative revenue opportunities and standardized deployment procedures allow local sub-contractors to complete data center constructions more efficiently in major cities. To win data center development projects, contractors often participate in auctions and offer competitive quotes for both time and cost. Several renowned construction contractors, such as Turner Construction, DPR Construction, Holder Construction, and Gilbane, have a strong presence in the market. Physical security is a top priority for hyperscale data center providers, with most entities preferring to implement four layers of security. Due to the growing demand for colocation services, some vendors opt for even higher levels of security, including five or more layers.Top of Form

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APAC Set for Higher Hyperscale Investments

The Asia-Pacific (APAC) region is poised for explosive growth in the hyperscale data center market during the forecast period. Notably, Southeast Asia, South Korea, Japan, and India are anticipated to play a pivotal role in this surge. Major contributors include Australia, India, Japan, China, Hong Kong, Malaysia, Singapore, and Indonesia. Although Singapore lifted its moratorium on data center construction in 2021, the focus of hyperscale investments has shifted to other Southeast Asian countries such as Indonesia, Malaysia, and Thailand. The coming years will witness an uptick in hyperscale activity in markets like Vietnam, the Philippines, and Taiwan, alongside ongoing growth in China, India, Japan, South Korea, Australia, and Hong Kong, driven by capacity expansion efforts by cloud service providers and tech giants.

Key Insights

  • In February 2022, T-Mobile, in partnership with Deutsche Telekom, launched T-IoT, a solution offering simplified global IoT connectivity for enterprises. 
  • In 2022, Rogers Communications launched a new IoT solution to focus on developing smart cities & buildings in Canada. 
  • Equinix approved the expansion of around 500 racks in its MT2 facility in Montreal. The facility is supposed to be operational by Q3 2023. 
  • As part of its Digital Transformation Strategy, the Chilean government decided to digitalize 100% of government services in the country by 2023. Public services under the healthcare, education, and government sectors are rapidly adopting AI and IoT solutions to transform digitally. 
  • In March 2022, Webex decided to expand its presence across Canada, with new data centers in Montreal and Toronto.
  • In March 2022, Microsoft decided to use the closed Lowe store to develop its new data center in Toronto, Canada.
  • In March 2022, Eastlink, a Canadian telecommunications company, opened its new data center in Halifax, Nova Scotia. For this, the company invested over $15 million.

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