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European data centre market prepares for growth of over 2,000MW

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CBRE’s forecasts show that cloud currently accounts for 80% of market demand, based on FLAP (Frankfurt, London, Amsterdam and Paris) market activity.

The European carrier-neutral data centre markets are scheduled to see record amounts of supply and take-up in 2021, with high rates of growth expected to last into 2022 and 2023.

According to the forecasts, hyperscale cloud providers will continue to be the main consumers of data centre supply over the coming three years, accounting for a high proportion of wholesale colocation deals.

Enterprises and other service providers are predicted to encourage growth across the retail colocation market as they look to transform IT environments post COVID-19.

Penny Madsen-Jones, Director of EMEA Data Centre Research at CBRE, said such high activity follows 2020, when the market surpassed its original forecast made in Q1, 2020 (prior to COVID-19) to record more than 200MW of new take-up.

“It is remarkable that the data centre market, which has faced supply challenges, has been able to meet continued high demand. Constraints have ultimately led more customers – in particular hyperscale customers – to carefully consider their data centre needs for the years ahead, and this has led to high pre-let activity,” added Madsen-Jones.

This provides CBRE with amazing insight into take-up for the years ahead. Much of the pre-let activity we have seen has been focused around existing cloud availability zones.

“We will see even more such activity as the build-to-suit market (which builds specifically to hyperscale specifications) grows.

“Many markets, however, will continue to experience challenges site access and power in where cloud availability zones exist, and we expect, as a result, to see new availability zones formed across existing markets in coming years, leading to continued high demand.”

The FLAP market will see more than 415MW of new supply added in 2021. This is almost 100MW more than the last highest performing year of 2019. The market will surpass 2,200MW of supply, according to CBRE.

“We also expect to see 370MW of take-up, more than 230MW of which has already been signed as pre-lets. The market signed 440MW of new contracts in 2020 – more than half of these will be realised in future years,” added the company.

“During 2020, 173MW of supply was added across the FLAP markets, which saw 201MW of take-up. The markets currently operate with a vacancy rate of 19%, down from 21% a year ago.”

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