How would you describe the state of the European data centre market?
In two words: still growing. In an article I wrote for DataCenterFrontier.com, I cited two separate CAGR’s from CBRE – 8% CAGR for the FLAP (Frankfurt, London, Amsterdam, and Paris) markets and 12% CAGR for the Nordic markets. In terms of global colocation revenue, 451 Research data ranks EMEA third to the US and APAC with a 19% share. However, according to CBRE, the first half of 2018 has been a record-breaking stretch in terms of both new supply and market demand for Western Europe. The real estate firm cites 95 MW of capacity delivered in 2018 with another 82 MW potentially to be added before the year is finished.
What are the biggest trends/factors affecting the European data centre market?
While it’s not new, cloud affects the data center market more than anything else. First and foremost, cloud has led to more IT outsourcing and less in-house decisions. Multi-cloud / hybrid IT plays well for the colocation value proposition as we put the customer closer to the clouds and carriers they need to access all under one roof. Hyperscale demand is affecting the global data center market and Europe is no different. We are seeing US-based hyperscalers and now APAC cloud/hyperscalers with huge requirements as they extend their offering across the globe. GDPR has put restrictions on where an organisation can store/process their data as well as policies for crossing borders. This is causing more development needs in individuals countries for businesses who operate in multiple EU markets.
Is network’s role becoming more or less important as the data centre industry evolves?
More important. Critical to the data centre industry. As stated earlier, we live in a multi-cloud world with more data than ever before being transferred from one place to another. The more data and the more repositories for that data, the bigger the pipes needed to ensure proper IT systems performance and end user satisfaction. Today, we are conditioned to expect zero performance degradation regardless of size and complexity. Also, with cyber security as a constant focus, multiple network services providers is mandatory for continuity of operations. Network will be even more crucial with continued market consolidation and global colocation proliferation.
How will mergers and acquisitions affect the European data centre market in 2019 and beyond?
This is one that hits close to home as we just sold EvoSwitch NL to Iron Mountain Data Centers for $235 million and it made us instantly a part of a global colocation offering with 1,100+ customers in four countries and the ability to map our global vision with a well-funded S&P 500 company who is in it for the long haul. Mergers and acquisition (M&A) activity in Europe continues to be strong as large colocation providers look to expand domestic offerings to major global markets in a race to interconnect the globe. Iron Mountain’s acquisition of EvoSwitch NL was not the only deal that made international news. Other significant transactions included the $442M Zenium/CyrusOne transaction, AXA IM/DATA4, and GTT’s acquisition of Interoute for $2.3 billion. Iron Mountain also acquired a Credit Suisse data center in London Slough to bolster its growing EMEA presence as well as in Singapore. Investment is being focused in the FLAP markets, Dublin, Madrid, and Nordic countries. In my opinion, we will continue to see EU market consolidation as the large US and Chinese colocation providers continue to connect their global network road map as well as race to critical mass necessary to be amongst the serious players left standing when it is all said and done. It will affect the market by adding integration capabilities as a core differentiator for companies really going global. Bringing two organisations together – especially in a new country with new languages, cultures, and currencies – is not an easy thing to do.
It looks like green data centers is gaining global momentum again. Are you seeing the same thing? Will it influence the global colocation industry?
I agree. Now that we are part of the Iron Mountain Data Center family, I have been more focused on the North American market than ever before. You are seeing organisations like Iron Mountain, Equinix, Digital Realty Trust investing real money to bring renewable energy to the grid and finding ways to make it good for the customer and the business as well as for the environment. These three organisations are top 10 EPA tech and telecom partners as it pertains to sustainability. They sit alongside the largest IT organisations in the world, which demonstrates the level of commitment. In Europe, thanks to strong legislation mandating green data centres, we have been a leader in sustainability, so it is good to see North America joining the team as we solve one of the top challenges of our industry – large consumption of dirty power. I believe we will see more from a green power product development perspective over the next two years than we have seen to date in the colocation industry.
