Europe’s leading data centre markets prepare for a torrent of new supply in 2021

Supply and take-up across the FLAP markets has been affected by the COVID-19 pandemic through Q3, with some projects and deals pushed into future quarters or even into 2021. Only 78MW has come online through 2020 so far, in contrast to 318MW added across the whole of 2019.

Thursday, 26th November 2020 Posted 4 years ago in by Phil Alsop

Around 400MW of supply is scheduled to come online across the Frankfurt, London, Amsterdam and Paris (FLAP) data centre markets in 2021, and more than this is already scheduled for 2022 – signifying the industry could see record supply growth in the coming two years. These figures have been projected from CBRE’s industry-leading European data centre coverage, which tracks the carrier-neutral colocation markets.

Already half of the supply scheduled for 2021 is pre-let, with hyperscale cloud and internet companies securing supply for future growth. These figures are in contrast to 319MW that came online in 2019 – a year previously applauded for setting the record for new supply.

CBRE’s supply and demand figures from its Q3 European Data Centres report, out this week, shows that 128MW of supply so far has been carried over from 2020 into 2021 as a result of COVID-19 delays.

“Despite this, the figures for earmarked growth – and this is based on projects that are already in or through planning – are still high for 2021. They are even more phenomenal for 2022, a year where we are not seeing any COVID impacts to our supply figures yet, and are testament to growing demand for cloud services across Europe and the growing influence of colocation on the delivery of these services,” Penny Madsen-Jones, Research Director of EMEA Data Centre Research at CBRE, said.

“We expect take-up figures will grow through 2021 and 2022 as more companies move to cloud, and use colocation as an onramp, and as hyperscalers realise more business and expand availability zones and network nodes in these markets.”

The Q3 carrier-neutral data centre market across FLAP grew by only 13MW of supply, and CBRE expects it will grow by a total of 78MW for the entire year. Many providers have experienced construction delays as a result of COVID-19 lockdowns along with other challenges impacting supply chains and planning.

As a result, some markets are operating with very low vacancy rates – Frankfurt and Paris now have only 12% of supply left for customer use.

Low vacancies are contributing to high demand from hyperscalers for pre-lets, with many wanting to ensure they have capacity set aside to meet future growth requirements.

“COVID-19 has seriously impacted supply across the FLAP markets through 2020, and we can see this even more through Q3 – one of our smallest quarters of 2020 yet in terms of market growth,” Madsen-Jones said. “Frankfurt and Paris are feeling this strain more than other markets.”

Frankfurt will see the highest rate of growth next year, with around 137MW of supply already scheduled to come online, while Paris will see 84MW added to its market.

“Contrary to market reports through Q3, CBRE believes Paris will remain the fourth largest market in Europe for carrier-neutral data centre supply, with the market expected to have 350MW of supply by the end of 2022, in contrast to the next largest market Dublin, which will only have 228MW,” Madsen-Jones said. “Paris is seeing a new wave of hyperscale demand but it has taken some time for providers to locate sites to accommodate this.”