An outlook on the data center boom

Financing a more connected future

In an increasingly networked world with sprawling volumes of data in cloud ecosystems, the market for data centers is experiencing explosive growth. In fact, the hyperscale data center market is expected to surpass a staggering USD 65 billion by 2025 from USD 20 billion in 2018, according to Global Market Insights, Inc.

 

The rising demand for data center services has naturally bolstered the data center construction market here in the U.S. and abroad. Not only that, even the 8 million data centers that exist worldwide today will transform as information and communication technologies evolve, new generations of data management professionals enter the space, and digital demand dominates worldwide markets.

 

With some industries rethinking operations and others seeing an uptick in demand amidst the COVID-19 pandemic, the pervasiveness of the data center industry is more pronounced than ever. In fact, Data Center Knowledge cites research from Omdia that found the COVID-19 crisis will further drive up demand for data center technology, including IT hardware and software to power, and cooling infrastructure gear for cloud service provider data centers.

It is said that the pandemic accelerated 10 years of digital transformation into 3 months. Zoom for example went from 10 million users/day prior to the pandemic to 300 million users/day, all without a noticeable decrease in performance. None of that can happen without a massive scale up in cloud capacity, and that capacity is mainly provided within data center projects.
James Groves, Siemens Financial Services (SFS) Americas

Certain regions in the U.S. have also risen to prominence as an attractive choice for data center development due to their physical network connectivity, access to fiber network and energy resources, as well as proximity to a skilled workforce.

 

To support the dramatic growth in the data center market, Siemens Financial Services (SFS) offers customized financial solutions, including construction loans. SFS recently closed its first data center construction loan transaction for a hyperscale data center project in Virginia, USA. As a knowledgeable advisor with extensive experience in financing long-term investment projects, the SFS Americas team worked with the client to craft a financing solution that fit their specific needs. The resulting solution involves SFS’s co-sponsorship of the data center’s construction loan.

A leader in smart infrastructure solutions, Siemens has a competitive advantage when it comes to understanding the unique needs of the rapidly evolving data center industry landscape. With this, SFS is aligned with industry experts such as Siemens Smart Infrastructure (SI), which helps us recognize the emerging growth and specialized needs of data center owners and developers. 
Anthony Casciano, President and CEO, Siemens Financial Services, Inc. 

Seeing the increasing criticality of data centers in our everyday lives, SFS Americas is well positioned with a national footprint to finance more of such projects in the future. SFS is also committed to investing in the data center construction market with expertise in digital infrastructure that, now more than ever, is a critical component to modern society and business performance.

 

By: Rabeea Tahir and Laura Schneebacher