The State of Data Center Commissioning in 2023

12 Oct 2023 by Colocation

One of the defining features of the Global data center colocation construction market over the last few years has been the prevalence of mergers, acquisitions, and joint ventures. The demand for new data centers is so high that its leading to collaboration on a scale the industry has never seen before, all in an attempt for providers to expand their reach and portfolio of solutions. 

In this article we’ll explore the most popular markets for new data center builds, the new approaches providers are taking to construction, and what the future holds. 

Hottest U.S. Markets 

Ashburn, Virginia 

Ashburn has long been a hot data center market due to the low cost of electricity in the region, the tax cuts and incentives that are offered to data center operators in the region, and the proximity to vital institutions in Washington DC. 

Loudoun county, where Ashburn is located, has estimated that upwards of 70% of the worlds internet traffic is routed through data centers in the county, making it the most sought after region for colocation in the US. This region will continue to be a highly desired location in the years to come. 

Dallas, Texas 

Dallas is a major communications hub for the Southern United States, with a high concentration of telecommunications companies. As a result, North Texas experienced the third most data center leasing activity in 2020. Many businesses are also migrating their headquarters and satellite offices to Texas to take advantage of tax incentives. 

The continued pipeline of businesses setting up shop will ensure that the colocation needs in the Dallas area will continue to increase along with construction of new facilities to meet demand. 

Phoenix, Arizona 

Demand in the Phoenix market originally stemmed from many companies viewing Phoenix as a preferred disaster recovery destination. However, there are several factors that have recently helped to make Phoenix one of the next up and coming markets in the U.S. Compared to other U.S. Markets, Phoenix is very competitive when it comes to colocation services. 

The accessibility of renewable energy in the southwest U.S. means that power costs are significantly lower than other markets as well. These benefits are what have led many organizations to look outside of California for their West Coast workloads, with Phoenix being one of the top destinations. 

Re-thinking Data Center Design and Construction 

The data center industry in no stranger to growth. The market is constantly getting larger, the need for power is skyrocketing, and the valuations of data centers and the providers that operate them are reaching unforeseen heights. 

As a result, the process of building massive facilities has become a well-defined process within the industry. However, while organizations know how to get these buildings up and running, the focus is now shifting to driving down costs and time during new builds. In order to do this companies must change how they design and build data centers, both large and small. 

Traditionally, every data center is designed and built slightly different in order to take advantage of the particular plot of land and location. Now, many companies are moving toward a standardized, modular approach that focuses the majority of resources on the design stage. 

Also referred to as the “Ikea Strategy”, this method creates a work package defining all the materials and scope of work. This includes job hours, crew size, and individual component costs. Everything is pre-defined and scalable so that costs and timeframes are well known ahead of time. 

The modular approach offers many cost saving benefits and flexibility in scheduling that didn’t previously exist. Having all stakeholders present in the extensive designing stage increases communication and collaboration. 

This reduces the likelihood of external factors leading to time delays. Problems such as delivery issues and equipment damage can be accounted for in advance so that solutions are pre-defined and budgeted for. Allowing for smaller work packages with your construction team also makes the work easier, repeatable, and quicker to complete. 

The modular approach has helped companies like Google bring their new data center construction timeframes down from 22 months to 18 months. Their goal is to ultimately get their processes so well defined that new projects complete within the 12-month range. Increasing the speed to market for new data center is essential for businesses to take advantage of the shifting winds of the global data center market. 

Looking Ahead 

New data centers will remain a hot commodity as Edge data center investments will skyrocket to accommodate 5G rollouts. We’ve already seen how 5G network deployment has led to an increased demand in high bandwidth internet in data centers worldwide. Edge data centers will create a decentralized data center model where hyperscale facilities will connect multiple edge data centers. Providers will continue to fill in the gaps where new data centers are needed in order to cut down on latency. 

In order to remain competitive, data center providers are constantly looking for ways to improve energy efficiency in their facilities. Customer demand for renewable energy is also on the rise as studies have shown that the data center industry consumes around 1% of the total global power supply. 

Organizations have started embracing renewable energy solutions due to a mix of corporate initiatives and government mandates. As the procurement of renewable energy becomes cheaper and more accessible within the industry new data center builds will have less overhead, leading to another boom in the market. 

Few industries are as sensitive to tax policies and incentives as the data center market. Not only does a data center location need to be safe from natural disaster and have access to cheap power, there also has to be an competitive tax structure available for the provider. 

In the last year, many states and municipalities have begun recognizing the value of luring data center providers to their land and have begun offering tax breaks to organizations. For example, Arizona offers data center operators an exemption from the Transaction Privilege Tax and Use Tax exemptions at the state, county, and local levels. 

These incentives are one of the factors that have led to Arizona being one of the most in demand locations for new data center builds. As more states recognize and embrace the digital transformation more incentives like these will become available which will lead to new high demand markets. 

Author Colocation provides consulting and engineering support around colocation and has developed a platform for Datacenter Colocation providers to compete for your business. It takes just 2-3 minutes to create and submit a customized colocation RFP that will automatically engage you and your business with the industry leading datacenter providers in the world. provides a platform to view and research all the datacenter locations and compare and analyze the different attributes of each datacenter. Check out our Colocation Marketplace to view pricing from top colocation providers.  


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