Data center space failed to keep pace with demand last year, despite the building boom fueled by the industry’s largest customers.
According to new research from commercial real estate services firm CBRE, there was 601MW of take-up across the 14 largest markets in Europe in 2023.
However, just 561MW of new supply was delivered during the same period - the second time in five years that take-up has exceeded new supply in Europe.
"Hyperscalers have sought increasingly larger facilities that are tailored to their needs for some time," said Kevin Restivo, CBRE's head of European data center research.
"As such, the average size of new wholesale facilities in Europe has grown dramatically over the past two years and will only accelerate. However, there are fewer deals being struck by data center providers with their largest customers."
Both take-up and supply were higher than during the previous year. In 2022, there was 546MW of take-up, 10% higher than in the previous year, and 550MW of new supply delivered in Europe - meaning that 2023 saw only 2% more.
It was take-up in the leading markets - Frankfurt, London, Amsterdam, Paris, and Dublin - that led to the imbalance across Europe in 2023, according to CBRE.
In Q4 2023 alone, take-up soared to 252MW, a 41% increase when compared to the previous quarter (179MW). This, it said, was largely due to pre-let capacity that was delivered in Dublin, London, and Paris.
"Demand in Europe will only accelerate, given that artificial intelligence workloads are expected to generate higher demand for capacity, as organizations look to enhance their operations by leveraging machine learning algorithms," said Andrew Jay, CBRE's head of data center solutions for Europe.
"For the meantime, the challenge remains the lack of available power and AI-appropriate facilities across Europe."
Data center demand is surging
According to a recent report from JLL, the power and storage requirements for data centers are growing exponentially.
The firm said it expects total data generation to double over the next five years, meaning that data center capacity would need to grow from 10.1 zettabytes (ZB) in 2023 to 21ZB in 2027 for supply to keep pace with demand.
The European Commission estimated the energy consumption of data centers in the EU stood at 76.8TWh in 2018, a figure it expects to rise to 98.5TWh by 2030.
Data centers accounted for 2.7% of electricity demand in 2018 and will reach 3.21% by 2030 if development continues at the current trajectory, it said.
"Many commentators feel that these figures are lower than will happen in reality, given the strong growth of emerging services and technologies such as streaming, cloud gaming, blockchain, artificial intelligence, machine learning and virtual reality,” the Commission said.
Suitable locations for data centers are rare, as emerging sustainability requirements mean that they need to be sited near to sources of renewable energy, and well-connected to the grid.
