As everyone knows, business is booming for colocation providers these days. In Europe, demand has now clearly outstripped supply.

In their Q1 report, CBRE forecast a gap of almost 10 percent (54MW more demand than 660MW supply) by the end of this year. Addressing this wave calls for a more creative and opportunistic approach to growth.

Think of a number; quadruple it

While demand is highest in the ‘Tier 1’ FLAPD hubs because there is so much infrastructure already there, we are all aware of the power of compound growth.  A handful of the ‘Tier 2’ markets (CBRE names Milan and Madrid) have risen from 2 MW capacity two years ago to 100 MW forecast by the end of this year.

If that sort of growth continues, and moratoria and space and power shortages continue in the FLAPD metros, we can abandon the ‘tier’ definitions altogether in just a few years.

Starting small always exaggerates growth rates; established markets cannot physically expand at this sort of rate.

But if, as many now agree, the accepted industry expansion rate of 15 percent moves above 20 percent in response to the exceptional demands of generative AI, the overall scale of digital infrastructure in Europe will explode. Combine this with limited or erratic availability in larger hubs (say Amsterdam, Dublin, Frankfurt) and the lines between Tier 1 and Tier 2 will shift so quickly that they become useless.

GettyImages-962093578 edge network.jpg
– Getty Images

Impact on business strategy

This is not a theoretical forecast, it is based on our own business experience, and it has already affected our overall strategy. Penta Infra has been retrofitting and building out the Edge for almost a decade now, with a primary focus on the complete internal rebuild of legacy in-house facilities to create brand new, sustainable multi-tenant data centers.  We acquired our first data center in Geleen in 2015; then Leipzig and Cologne (2017) Berlin (2018) Dusseldorf and Hamburg (2019) Leeuwarden (2020) then Copenhagen (2021).

Given the rise in demand, in the last two years, we have begun to combine these emerging data hubs with core hub sites. But, with supply constrained, our new sites are at the Edge of the core. 

Not long ago, people would have debated whether these were part of the core metro, but not anymore – both are now a part of the newly expanded Paris and Amsterdam metropolitan regions. And because they have space and power to hand, these are now the fastest-growing geographies in the FLAPD hubs.

We are not alone in making this shift. All you need to do is scan the websites of every data center provider with ‘Edge’ in its name, and count the number of FLAPD sites.

What this means for customers

Apart from the impact on the Edge provider business model, this trend has some major customer impacts.

The first is on prospect profiles, as global businesses are extremely interested in FLAPD sites, and their presence will enrich the ecosystems in our facilities for large national and ambitious regional customers.

However, the primary impact is in accelerating customer access to data that runs through the core. Customers can extend their footprint from emerging hub locations to a core hub location more easily, giving them added resilience and help in growing their operations and reach much faster, but with the same levels of support and quality.

The blurring of the line between Edge and core delivers benefits in both directions, broadening customer appeal and at the same time accelerating the growth of customers in Europe’s emerging hubs.