Data centres in Europe

Demand for data centres in Europe is at an all-time high. While the more mature FLAPD (Frankfurt, London, Amsterdam, Paris and Dublin) markets continue to experience a significant rate of activity, the past 12 months has witnessed a huge swathe of activity throughout the secondary markets.

Continued interest from, and increased competition between, private equity investors has been a key source of demand, with examples of public and private partnership deals beginning to emerge such as ‘SINES 4.0’ in Portugal.

Although the core markets remain the largest drivers of growth in terms of new supply, with almost a gigawatt (810MW) under construction, the four regions of Warsaw, Milan, Madrid and Zurich have a combined IT load of just over 170 MW.

Taking a similar approach to the one-year moratorium on data centre construction in Amsterdam, Frankfurt is also looking to regulate data centre construction. Data centres amount to 64 hectares in Frankfurt and in addition to the planning requirements, vertical rather than horizontal builds could be the way forward to reduce building footprints; as well as a move to share waste heat, to address data centre energy consumption.

Construction market conditions and publicly known projects

Acquisition is still prevalent, especially as the trend of investment by financial investors and private equity into the sector continues.

Supply chain disruptions due to COVID-19 related delays and pent-up demand have had a severe impact on the data centre sector in Europe. Global steel prices have more than doubled in the past 12 months in Europe, according to the London Metal Exchange.

As well as price increases, long-lead in periods are impacting data centre programmes, especially the supply of equipment such as generators and switchgears. It is common at the moment for switchgear to have a 12-16 week lead in.

Similarly, the war for talent continues to impact the data centre sector. Skills shortages persist, and the need to retain and attract talent and diversity into the sector is vital.

Despite these supply-side challenges, there have been a wide range of notable projects which have moved forward. Vantage has moved into the European market with force, with greenfield construction in Berlin, Frankfurt, Milan and Warsaw during 2021.

Equinix continues to expand its global portfolio including its xScale program throughout Europe, Asia Pacific and the Americas; where it recently announced $3.9bn expansion through its joint venture with GIC. Once built out, xScale will amass to 32 global facilities and 600MW.

CyrusOne announced a further 18MW with its London V data centre in Slough, while also in Slough, Equinix added 4MW of retail capacity at LD7 alongside LD11x, providing 20MW. A further 24MW was launched by Virtus through their London data centre.

A backlog of demand, has seen a sharp uptick in supply in Paris, reaching almost 300MW when factoring in the circa 72MW anticipated for this year. New projects which are particularly noteworthy are Equinix’s 10MW PA9x and CyrusOne’s 27MW scheme.

2022 outlook

There continues to be a trend towards a wider distribution of cloud and content services, which will drive the construction of data centres throughout Europe and beyond FLAPD.

While the data centre sector in Europe is set to continue to expand at a rapid pace, at the same time the climate crisis is rising rapidly up the agenda and requires careful navigation so as not to act as a limiter to growth.

One of the ways that the sector is responding to the net zero challenge is through initiatives such as the European Climate Neutral Data Centre Pact; which is a pledge by owners and operators of data centres as well as trade associations within the EU.

The pact embodies a self-regulating commitment to be climate neutral by 2030 with specific actions such as aggressive power use effectiveness (PUE) targets; an example of which is an annual target of 1.3 for new data centres operating at full capacity in cool climates by the beginning of 2025.

For further information contact:

Rebecca Best
Director, Head of Data Centre Cost Management, UK
e: [email protected]