Demand for data centre construction rising

In its latest report, built asset consultancy BCS says 88% of surveyed developers and investors expect to increase the amount of European technical data centre area they own or are prepared to fund in the next 12 months.

Construction firms in Europe are looking to increase investment in data centre space. Image: Adobe Stock

The BCS Report, which gathers insights from over 3,000 senior professionals across Europe and the UK, said the increased levels of spend among construction sector respondents was telling, as survey respondents were generally reporting that the past year was the most challenging ever for sourcing construction raw materials, with concrete/cement, steel, cladding materials, and dry lining materials all proving to be more difficult to acquire, as surplus stocks have been used up and price inflation bites.

A significant proportion of respondents also reported difficulties in sourcing equipment components for the fit-out of their facilities. Again, there was a marked uplift in problems in the past year, across all areas of the M&E functions, most notably around generator, battery and distribution infrastructure and air-cooling equipment.

Chris Coward, head of project management at BCS, said the response “resonates with the challenges we at BCS are facing as we continue to project and cost manage major data centre construction projects across the UK and Europe.”

He added, “The situation is unlikely to change in the short to medium term – and it may even get worse – so any plans to defer or delay should be considered in that context. In the meantime, the industry is having to navigate these challenges and find the best way to mitigate the issues. Our advice to our clients has been to push forward, bite the bullet.

“Of course, anyone who operates in the construction industry is used to the need for forward planning but this has now been taken to a new level. For example, depending upon the project and the associated cost restraints, we are working with clients to place orders for future phases of any development now – even if this is not planned for a while, booking factory slots well in advance for key elements. That way we can secure the supply and price for the client and the supplier can benefit from increased visibility.”

Chris Coward, head of project management at BCS

Along with shortages in construction materials, difficulties sourcing fit-out equipment components has led to price inflation across the board.

The BCS survey reported more than double the number of respondents experiencing price rises this year compared with last year. In the case of security systems components, the number increased nearly four-fold from around 9% to 36% this year.

BCS added that, this month, the price of key elements such as transformers is being guaranteed for only 2 weeks (it used to be 4) and some material costs are rising almost daily, bringing added pressure on companies to sign off on costs and project stages quickly or risk paying more and/or having to delay works.

Coward said, “In many cases delaying a project is not feasible and future demand levels for data centres show no signs of slowing. It may be best to procure early and don’t single source but go out to the wider market.

“It’s also a good idea to assess the possibility of using alternative products that may be easier to get hold of – for example perhaps not using cladding. In some cases, a review of existing facilities is worthwhile, to see if they can be upgraded or refurbished to provide a short to medium fix. In fact, we are seeing significant opportunities within older facilities with critical system upgrades and SPOF removal.”