European data centre market on course for a record-breaking year

CBRE forecasts 394MW of new supply will be added to the Frankfurt, London, Amsterdam, and Paris (FLAP) markets in 2021. That is more than double the new supply brought online in 2020.

The largest European carrier-neutral data centre markets are poised to reach new supply and take-up highs in 2021, thanks in large part to tremendous demand from cloud providers, according to the latest research from global real estate advisor CBRE.

In the third quarter of 2021, 134MW of take-up was recorded in the FLAP markets, a new quarterly high for the market after a quieter second quarter. The previous high was set in Q1 (92MW).

Hyperscale cloud providers accounted for 86% of third quarter take up. For 2022 and 2023, CBRE expects the hyperscalers to remain the largest driver of wholesale colocation growth. Enterprises working to digitize estates are expected to be the largest driver of retail colocation growth.

As far as the fourth quarter of 2021 and the full year goes, at least 80MW more of take-up is expected, which all but guarantees 2021 will be another record year for the FLAP markets. Further to that point, CBRE forecasts more than 394MW of new supply will be brought online this year.

That will bring the total supply of the FLAP markets to 2.6GW, which is more than double the market in 2017, a testament to the tremendous demand seen by colocation data centre operators in Europe’s largest markets.

The tremendous growth of supply comes despite economic pressures on providers that have led to increased costs (for example materials, shipping, fuel, labour, land, and equipment).Providers are also facing higher energy costs of 20% or more in some cases.

Kevin Restivo, Director of EMEA Data Centre Research at CBRE, said the expected record activity is reflects tremendous demand, supply constraints and partly because of COVID-19 as several deals and deployments slipped into 2021.

“The data centre sector is white hot. The market is outpacing itself despite strong headwinds such as supply chain constraints. That is a testament to the seemingly insatiable appetite of the hyperscale cloud providers for data centre supply; this class of companies are gobbling up space and power with the future in mind. As a consequence, we are seeing ever-higher pre-let activity,” Restivo said.

CBRE is releasing these findings and more in its Q3 2021 Europe Data Centres report.


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