Europe is continuing to attract data centre investment, thanks to the supply demand imbalance, according to recent data from CBRE.
The consultancy’s global data centre trend report 2024 analyses total inventory, vacancy rates, net absorption, rental rates and availability across global markets.
The European data centre market grew by nearly 20% year-on-year in the first three months of 2024, thanks to development across all four major markets, namely Frankfurt, London, Amsterdam and Paris.
London’s data centre inventory growth recorded an 11% increase to 1,062 megawatts in Q1 2024 from 956MW at the end of the same period last year. Amsterdam recorded 12% growth to 569.2MW from 508MW, Frankfurt grew by 24% to 874.3MW from 707MW, while Paris was up 41% to 524.3MW from 373MW.
Turning to vacancy rates, the major four markets fell by a combined two percentage points year-on-year in Q1 2024 to 10.6%. Amsterdam had the largest decrease of nearly eight percentage points to 11.5%, followed by London which saw a decline of more than four percentage points to 11.2%.
In contrast, vacancy rates across Paris and Frankfurt markets grew on an annual basis in Q1 to 16.1% from 11.9% and to 6.0% from 4.8%, respectively.
Despite macroeconomic headwinds, leasing availability stayed relatively flat year-on-year, with Amsterdam again experiencing the largest decline across the European markets, dropping to 65.4MW from 98.6MW. Data centre availability in London fell to 118.8MW from 146.1MW.
In turn, leasing availability in Paris almost doubled year-on-year to 84.4MW from 44.2MW, while Frankfurt recorded an increase to 52.7MW from 33.9MW.
CBRE noted that preleasing is now common practice across the key markets, making it increasingly difficult for companies to secure suitable space.
Europe’s data centre demand from start-ups, enterprises and GPU-as-a-service providers remains high.
The four major markets had a significant surge in net absorption in the three months to March 31 this year, reaching a combined 487.6MW, nearly double that of the previous year.
CBRE has predicted that data centre development radius across the British capital is likely to expand going forward amid capacity scarcity, limited power availability, and few local AI-ready data centres.
As such, areas well outside of London’s main regions, with less data centre concentration, may offer more options, according to CBRE.
Andrew Jay, head of data centre solutions for Europe at CBRE, said: “Power and land shortages, combined with increased regulation are the most prominent inhibiting factors when it comes to data centre development in Europe.”
“There are added pressures with ever-rising demand levels as a result of AI growth, underscoring the need for ongoing investment in development.”
CBRE has also predicted rising construction costs will continue to push European data centre pricing higher. Rental rates in Frankfurt and London have steadily climbed over the past 18 months, with the former recording a steep 15% increase, retaining its status as one of the most expensive markets in Europe.
Photo © Ismail Enes Ayhan/Unsplash
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