Advanced Technology Market Trends Q4 2023

by John Arcello and John Vardaman

Data center racks behind a glass wall looking onto an office hallway.

Mission Critical and Advanced Manufacturing construction markets continue their growth into 2024.

Market Watch

Advanced Manufacturing

It’s not just your imagination nor flashy headlines, the U.S. is in a construction boom for manufacturing, led by a focus on advanced manufacturing like solar, semiconductors, and electric vehicles and their associated supply chains & infrastructure. These are all areas of focus for DPR.

While this rise is generally attributed to federal grant/lending programs like the CHIPS Act and the Inflation Reduction Act, much of the news coverage is presenting construction dollars already spent, so many of those projects were already planned prior to those incentive programs. We are continuing to see positive momentum around this product type for the next several years as many of these technologies are interlinked. Take a look at this map tracking where some of these projects are happening in the U.S.

Customer Challenges

How Can We Help?

Utility availability & distribution	We tap our in-house supply chain team to locate and source generation and distribution equipment to meet critical lead times prior to construction commencing. We can also provide early analysis of existing or greenfield sites to compare capital costs versus time to start production.
International clients with rise of foreign direct investment	Leveraging DPR’s international resources in both Europe and Asia Pacific to help facilitate common understanding of goals, regulations and common practices in both the originating country and in the U.S.
Integration of Tool Vendors, Designers, Construction Schedules, Workflows & Processes	Using 3D-modeling, virtual design and construction skills, and integrated project management tools, we have been able to bring production tools into the virtual built environment prior to their completion to reduce install and start-up timeline - critical in a manufacturing project.
Limited Design Capacity	As the construction boom in these technical spaces continues, more designers are seeing their own resources taxed. We can provide support for critical areas of design to alleviate pinch points and allow the design team to focus on critical areas without sacrificing the details needed to support construction.

Open office space with monitors on desks, lockers on one wall, and a colorful accent wall.

Market Watch

Mission Critical

As previously stated in our Q2 2023 market report, the demand for data center development is arguably the strongest of any real estate sector. While in its infancy, AI is generating a great deal of industry chatter and cloud services are growing rapidly to support AI's need for exponentially more computing power.

Hyperscalers continue to drive the industry by aggressively expanding their footprints across the globe, both as owner/operators and tenants. Validated by CBRE, Northern Virginia remains the largest global market far and wide, followed in the U.S. by Dallas, Silicon Valley, Chicago, and a rapidly growing Phoenix market. Both hyperscalers and colocation developers are now looking more closely at secondary and emerging geographies due to limited land and power constraints in primary markets.

Looking at data from JLL Research, in the past 10 years we've seen the average transaction size for leased space range from 2 to 36 megawatts (MW). Currently in 2023, we're seeing transactions range between 36 and 72MW. In 2024 and beyond, we are expecting to see a wider spread of transactions, ranging from smaller 2MW deals up to mega 300+ MW.

Customer Priorities

How Can We Help?

Speed to Market	Shepherding the use of more collaborative project delivery methods like full design-build, MEP design-build, or design-assist enables projects to be delivered safely, quickly and cost effectively. As we look at strategies to reduce field labor on site, increase safety opportunities, and enable greater speed to market, Design-to-Build processes provide consistency and predictability in project delivery from initial concepts through occupancy.
Cost & Schedule Certainty	Total cost discussions A few hundred hours of upfront analysis can save millions on the backend when working collaboratively with a design and owner team to ensure efficiency of the space, and understanding of all capital costs. We are leveraging 4D scheduling to analyze the sequence of construction, and sharing that data with our trade partners to be more efficient. Even sharing these types of tools to help trades or craft understand the sequence, safety risks, or complex logistics scenarios.
Power Availability & Capacity Constraints	While utility providers are working through power constraints with 3-5 year lead times in some geographies, we can help Owner’s assess the viability of alternative sources for primary and backup power. As discussed at our Sustainable Data Centers Roundtable, alternative sources include solar, wind, hydro, renewable natural gas, fuel cells, battery storage, small modular reactors, among others.

Watch Now!

How do we support the growth of digital infrastructure while also better managing its energy, water and carbon footprint? Listen as stakeholders from across the industry discuss greener data centers through new approaches to design and construction.

Looking for more general market insights? Take a look at our full market conditions report of Q4 2023. Or take the full report with you by downloading the PDF.

Photos: Ulf E. Wallin