European data center hot-spots are likely to finish the year with record results, according to research by property consultancy CBRE.
London, Frankfurt, Amsterdam and Paris are set to add 195MW of total power capacity this year, increasing their overall supply by 20 percent. Majority of this growth has focused on London, allaying concerns about the short-term impact of Brexit on the regional colocation market.
“2017 has been a remarkable year for colocation in Europe and, with 2018 set to follow-suit, any thoughts that 2016 might have been a one-off have been allayed. We have entered a ‘new-norm’ for the key hubs in Europe, where market activity is double what we have been accustomed to in the pre-2016 years,” said Mitul Patel, head of EMEA Data Centre Research at CBRE.
Let the good times roll
CBRE says take-up of colocation power capacity across the four major markets reached 86MW in the third quarter of 2017– a new record, in a sequence of record quarters. All signs suggest that this level of growth will continue, with European data center operator spending expected to reach £1.2 billion before the end of the year.
High demand will be especially visible in London, where 41MW has been leased to customers between January and September, representing 48 percent of the European total.
“Given this ongoing market activity, it is no surprise to see so many investors wanting a piece of the action in Europe. As demand for data centre capacity continues to entice investors, the pool of available companies and assets diminishes. Consequently, those looking to deploy capital in Europe will need to act decisively, leading to more M&A investment in the coming year, beginning in Q4,” Patel said.
“Furthermore, the low cost of capital available to large data centre developers, and a shift from private equity to more longer-term institutional and infrastructure investors, will mean that both investment volumes and prices paid will remain at historically high levels.”