According to a report from CBRE, the need for data centre space to support AI-specific requirements is pushing Europe’s largest colocation data centres to unprecedented heights.
Europe’s data centre market is experiencing a significant surge in investment, driven by the booming demand for AI and cloud services, even as power shortages, following the global energy crisis, pose challenges across the continent.
The CBRE “Global data centre trend report 2024” highlighted rising rental rates, increased construction activity and robust investment as key characteristics of the European data centre market. The report also points out that AI’s growing influence is creating unique challenges for data centre operators, particularly in securing the necessary power and land for AI-ready facilities.
“Power and land shortages, combined with increased regulation, are the most prominent inhibiting factors when it comes to data centre development in Europe,” said Andrew Jay, head of data centre solutions, Europe, at CBRE. “There are added pressures with ever-rising demand levels as a result of AI growth, underscoring the need for ongoing investment in development.”
The CBRE report noted that rising rental rates across Europe are mainly driven by higher construction costs for data centres. Additionally, a supply-demand imbalance in primary markets is leading to lower availability, exemplified by Amsterdam’s vacancy rate dropping from 19.4% in Q1 2023 to 11.5% in Q1 2024.
Emerging markets are also attracting significant investment as companies seek to secure data centre capacity. Cities like Oslo and Madrid are seeing increased demand for hyperscale-suitable facilities, and CBRE expects continued investment in these areas.
“Secondary European markets are growing for a variety of reasons. Hyperscale ambitions and lower power costs have driven rapid growth of markets such as Oslo, given its accessibility and economic importance. In some cases, this makes them hotspots of data centre construction,” said Kevin Restivo, head of European data centre research at CBRE.
As AI continues to shape the landscape of data centre needs, ongoing investment and strategic development will be crucial to meeting the continent’s growing demand. The CBRE report suggests that while power and land shortages present significant challenges, the potential for growth in both established and emerging markets remains strong, driven by the relentless pace of AI and cloud service expansion.
