New research from Cushman & Wakefield has identified Berlin, Reykjavik, Oslo, Warsaw, Zurich, Milan, Vienna, Madrid and Prague as emerging hotspots for data centre development in Europe.
According to the report, the European data centre market has long been dominated by the ‘Flap-D’ markets of Frankfurt, London, Amsterdam, Paris and Dublin, cities with their own deep business and financial sectors to serve.
Cushman & Wakefield suggests that while these markets are still critical to the data centre ecosystem as entry points - with over 500 mw of construction underway among them - interest is now competing with physical limitations including a lack of energy to power the centres, limited stock and a need to be closer to regional users.
Stephen Kirby, Partner, data centre advisory at Cushman & Wakefield, added: 'Increasing land values, limited power availability, data centre construction moratoriums within some Flap-D markets and fibre connection latency demands has resulted in hyperscalers moving data centre workloads away from established markets and closer to their customers.
'This move has unlocked activity in emerging data centre locations, cities that would be classed as Core in any other asset type. A wide array of pension funds, sovereign wealth, infrastructure funds and private equity firms see the investment potential in data centres and are circling the continent looking for an initial foothold in the European market.'
According to the findings, the Covid-19 pandemic has only propelled this trend further as millions continue to work from home, seeing demand and opportunity deepen in secondary markets.
Of the cities studied, Reykjavik (212 mw), Berlin (199 mw), Warsaw (128 mw), Oslo (125 mw) and Zurich (117 mw) and are currently on track to becoming the five largest secondary data centre markets in the next five to ten years. The greatest growth from current capacity is led by Berlin (+342%), followed by Reykjavik (+308%), Olso (150%), Warsaw (+100%), Zurich (+89%) and Milan (+56%).
Kevin Imboden, research director, data centre advisory group at Cushman & Wakefield, said: 'The huge energy requirements of data centre sites are driving significant investment and development in markets that can leverage reliable, low cost green sources of energy such as hydropower, therefore markets such as the Nordics, which also benefits from close proximity to successful business hubs, are gathering considerable interest.'
