Almost 1GW of new colo capacity expected in Europe in 2025 – CBRE

Europe’s Data Center Market Booming: Growth,Challenges,and Opportunities

Europe’s data center market is experiencing a surge in demand,with a projected influx of 937 megawatts (MW) of new colocation capacity by 2025. This represents a significant increase from the 655 MW delivered in 2024, highlighting the rapid expansion of this crucial infrastructure sector.

Frankfurt remains Dominant, But secondary Markets Rise in Importance

While Frankfurt continues to be a major hub for data center deployments – with 141 MW of supply delivered last year – a significant shift is occurring towards secondary markets. Citing constraints on power and land in primary locations, CBRE predicts that a larger proportion of new data center capacity will be concentrated in these secondary markets.

“The data center construction boom will continue unabated,” stated Kevin Restivo, head of European data center research at CBRE. “available power and appropriate land, government incentives, and hyperscaler ambitions are key factors that are driving the rapid growth of markets such as Milan, as well as the continued expansion of leading markets like London and Frankfurt.

Vacancy Rates Near Historic Lows, Fueling Continued Demand

The escalating demand for data center space is reflected in the declining vacancy rates across Europe. FLAPD markets (Frankfurt,London,Amsterdam,Paris,Dublin) have seen vacancy rates plummet to a record low of 8 percent. Across Europe, vacancy rates have fallen to 10 percent, and are projected to stabilize at around 8.5 percent by the end of 2025. This sustained low vacancy rate signifies a robust and competitive market.

Global Players Driving Growth and Investment

Major players in the data center industry, including Yondr, Equinix, and Global Switch, are actively expanding their footprints in european markets. Last year, these companies launched several new facilities, particularly in Frankfurt, further solidifying the city’s position as a leading data center hub.

Secondary Markets Offer New Opportunities

The emergence of secondary markets as attractive locations for data center deployments presents exciting opportunities for investors and developers. New data center developments are blossoming in cities like Madrid and Milan, pushing these markets to exceed 100 MW of supply by the end of 2023.

Looking Ahead: Sustainability and Innovation

As the data center market continues to expand, sustainability and innovation will be crucial factors driving future advancement. Data centers are responsible for a significant portion of global energy consumption, so incorporating renewable energy sources and implementing energy-efficient technologies will be essential for minimizing environmental impact.

Furthermore, advancements in artificial intelligence, edge computing, and other technologies will shape the future of data centers, requiring ongoing investment in infrastructure and innovation to meet the evolving demands of the digital world.

What strategies are being implemented to address the growing energy consumption of data centers in Europe?

Exploring Europe’s Booming Data Center Market: An Interview with Industry Veteran, Dr. Amélie Leroy

With Europe’s data center market experiencing remarkable growth, we sat down with Dr. Amélie Leroy, a respected industry expert and CTO of EcoDataCenter, to discuss the market trends, challenges, and opportunities driving this surge in demand.

Rise in Colocation Capacity and Secondary Markets

Archyde: Dr. Leroy, europe is set to receive an influx of 937 MW of new colocation capacity by 2025. What are the driving factors behind this growth?

Dr. Amélie Leroy: Several factors are contributing to this growth, including the increased adoption of cloud services, the need for data sovereignty, and the growth of hyperscalers. Additionally, the ongoing COVID-19 pandemic has accelerated digital change across various sectors, further boosting demand for data center services.

Archyde: While Frankfurt continues to dominate,we’re seeing a shift towards secondary markets.Why is this happening, and which markets are becoming increasingly attractive?

Dr. Amélie Leroy: The shift is largely due to constraints on power and land in primary markets like frankfurt. Secondary markets, such as milan and Madrid, offer more available resources and often more cost-effective options. Also,many secondary locations are starting to offer competitive connectivity and incentive packages to attract investments. Moreover, the presence of hyperscalers in these markets is driving growth, as they often prefer to have a strong regional presence.

Record-Low Vacancy Rates and Continued Demand

Archyde: Vacancy rates in FLAPD markets have plummeted to a record low of 8 percent. How does this translate to the overall market and its competitiveness?

Dr. Amélie Leroy: The sustained low vacancy rate signifies a robust and competitive market. It shows that there’s considerable demand across Europe for data center services, attracting more investors and developers to build new facilities. Meanwhile, tenants have more flexibility to choose among available providers and negotiate better terms, promoting competitive pricing.

investment and Growth by Global Players

Archyde: Major players like Yondr, Equinix, and Global Switch continue to expand their footprints in Europe. What role do you see these established providers playing in shaping the market’s future?

Dr. Amélie leroy: These established providers, along with new entrants, will continue to play a notable role in the market’s growth. They bring capital investments, expertise, and economies of scale, driving innovations in technology and sustainability. by investing in and developing new data center projects across Europe, they help meet the growing demand for services and push the boundaries of what’s possible in this sector.

Sustainability and Innovation as Key Factors for Future Growth

archyde: As the market continues to expand, what are the most critical challenges that the industry needs to address to ensure sustainable and innovative growth?

Dr. Amélie Leroy: One crucial challenge is sustainability. Data centers consume a massive amount of energy, and reducing their environmental impact is essential. This involves integrating renewable energy sources, implementing energy-efficient technologies, and promoting better waste management practices.

The industry must also keep pace with technological advancements, such as AI, IoT, and edge computing, which will require ongoing investment in infrastructure and innovation. Collaboration between industry stakeholders, academia, and policymakers will be vital in addressing these challenges and shaping the future of data centers in Europe.

Archyde: Thank you, Dr. Leroy, for sharing your insights. As we look ahead, what thought-provoking questions or topics would you like readers to consider and discuss?

Dr. Amélie Leroy: I’d encourage readers to think about the balance between data center decentralization and the required level of interconnectivity. With the growth of edge computing and the need for low-latency services, how can we ensure that data centers are both decentralized and well-connected? I’m eager to see the industry’s solutions to this complex challenge.