As the onset of the coronavirus pandemic in 2020 forced many people to stay at home, demand for online services rose exponentially. While the U.S. data center market was already robust prior to the pandemic, increased demand for streaming, apps, social media, online shopping, and cloud storage services pushed the need for data center capacity into hyperdrive.
Atlanta has been a major beneficiary of the uptick in demand for data centers due to its relatively inexpensive power, strong fiber access, great airport and infrastructure, prime workforce, and Georgia’s sales and uses tax exemption for data centers. According to CBRE’s North America Data Center Trends report, Atlanta had 229.5 megawatts of data center inventory as of the end of 2021, the sixth-largest data center market behind Northern Virginia, Dallas/Fort Worth, Silicon Valley, Chicago, and Phoenix.
While not yet in the top-five data center markets, Atlanta likely will soon surpass other major markets for the many reasons stated above. According to the CBRE report, Atlanta’s data center inventory increased by 65.7 megawatts in 2021, a 28.6% increase in capacity – the largest increase of any major market. Much of the increase in demand for data centers in Atlanta and across the U.S. have come from the country’s largest tech companies. Indeed, much of Atlanta’s increase in data center capacity over the past year was driven by demand from a large social media company.
This swift pace of growth is likely to continue. As of this year, there are approximately 50 data center campuses in the greater Atlanta area, with approximately 20% of those campuses continuing to expand over the next two years. Many of the major tech players that are building mission-critical facilities in the region are not just stopping at one facility, as demand continues to escalate. With several West Coast tech firms already in the Atlanta data center market, conditions are ripe for other major tech players to enter.
In addition to tech companies, data center demand in the region also comes from colocation providers, which build data center facilities and lease out the space to other companies for servers or other computing hardware. This service is geared more toward companies with smaller capacities that may not need to build an entire data center for its own use. The five largest and most well-known colocation vendors have facilities in the Atlanta area, further underscoring its status as a prime data center market.
Skanska has been fortunate to be a major player in Atlanta’s expanding data center market, with involvement in several major data center construction projects. With complex requirements for mechanical and electrical design, data center construction requires highly skilled professionals and contractors. Important considerations include a requirement for confidentiality around secrets of operations and an understanding of high-voltage construction and the related safety protocols.
Major tech clients have raised the bar on safety in data center construction, often requiring quality assurance/quality control (QA/QC) teams, something that would not be as common on other types of projects. In the Atlanta area, the mechanical, electrical, and plumbing (MEP) trades have done an excellent job of getting up to speed on these unique requirements and excel at managing the process and working with local commissioning teams.
In addition to a focus on safety, Skanska and our partners champion the importance of increasing diversity in the construction industry, a goal that has been reinforced by major tech clients building data center projects in the area. Many tech companies have challenged general contractors to meet specific targets for minority and women-owned business enterprise (MWBE) representation on projects, requiring these statistics with the submission of bids. For some data center projects, we have been tasked with matching the 37 percent MWBE participation rate achieved on the Hartsfield Jackson Atlanta International Airport expansion project, in which Skanska is also involved.
Skanska’s track record and its intense focus on safety continued push for diversity, and strong partnerships with well-trained MEP contractors have enabled us to effectively take on the challenges of complex data center projects. As the data center market in our region continues to expand, Skanska will be at the forefront of building successful projects that will further drive investment in our region.