Materials, labor shortages threaten data center construction boom

Abstract

Dive Brief: Demand for data center construction remains stronger than ever, but issues around labor, supply chain and inflation could mute the pace of building in the sector, according to a Turton Bond data center market report. "The overall outlook for data center construction in 2022 will come with plenty of challenges and uncertainties," the New York-based real estate consultant's report stated, including the need to bring skilled labor to the rural areas where these projects are typically located. The price of steel, a major component of data center construction, has increased just under 50% over the last 12 months, though it is down off recent highs. Google plans to invest $9.5 billion in offices and data centers in the U.S. this year, while Meta, parent company of Facebook, recently launched two more data centers in Temple, Texas and Kansas City, Missouri. "The data center market has been a solid performer over the past several years, and the repercussions from the pandemic are likely to be a further boost to the sector," said Richard Branch, chief economist at Dodge Data & Analytics, during a mid-year construction outlook webinar. "Increased working from home and hybrid work will create demand for more robust cloud-based systems resulting in continued strength in data center construction." Through the first quarter of 2022, for example, data center construction has been on a tear, according to Dodge. Supply chain constraints and labor shortages create an unpredictable market, which may affect the data center construction sector, according to the Turton Bond report.