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Understanding the energy market key to future Data Centre growth

Jones Lang LaSalle’s Spring 2013 Data Barometer report shows that consumption of power by the European data centre industry has doubled in the last ten years

London, 27th June, 2013 - Jones Lang LaSalle has published its tenth UK and European Data Centre Barometer survey which shows overall positive sentiment for prospects for the EMEA market. However, the report warns that the increase in the industry’s consumption of traditional power supply means it is swimming against the tide of global modern policy and  power consumption which is placing an increased emphasis on renewable energy.

For the first time, Jones Lang LaSalle’s Barometer examines how global energy supply and regulation will impact the data centre property sector The survey found that two-thirds of respondents now rank power supply as their number one consideration when choosing a new data centre and that nuclear power across Europe is thought to be the most important source of power production in the run up to 2020, knocking gas from the top of the utilities list.

The report cites some examples of high profile and innovative data centre energy use, particularly in America. This includes Microsoft’s data centre building located next to a Wyoming landfill  to use its methane gas and Google has strategically chosen its data centres in Oklahoma and Iowa so they can directly benefit from wind farm production.

David Willcocks, Director of Jones Lang LaSalle’s Data Centre team, said: “The more the data centre industry understands the dynamics and challenges of the energy market the more it can closely align itself to achieving its own objectives. Its continued success is inextricably linked to its ability to source a reliable and cost effective power solution. The most notable issue is the cost implications of replacing ageing environmentally unfriendly power infrastructure. These will all have an effect on a country’s competitiveness against its European neighbours when vying for the attention of large data centre requirements.”

While there are examples of centres being built next to renewable forms of energy, respondents to this and previous surveys don’t see proximity to a renewable energy source as important in terms of location. This is because there is still a demand for data centres in or near large urban areas, for reasons which may include employment, accessibility and access to network infrastructure amongst others. The majority of data centres, therefore, will continue to face the on-going difficulties of accessibility to a secure and low-cost power supply.”

Jones Lang LaSalle’s survey also found that colocation, IT providers and carriers remain optimistic; three quarters expect to expand their ‘in house’ portfolio over the next year. Encouragingly, in this year’s survey there was once again a fall in the number of respondents who will be reducing their ‘in house’ data centre space, to three percent.  While there was a drop in terms of expectation of expansion of ‘third party’ managed space to one-in-four from one-in-three, this is still above the long term average recorded since the survey  began in 2009. 

Developers and investors are showing increased optimism, with nearly two thirds of respondents expecting to expand the size of their ‘in house’ technical floorspace portfolio. There was also a slight softening of attitudes towards speculative or part-speculative development with nearly forty percent suggesting they would build out space with twenty five percent or less pre-let.

David Willcocks concluded: “Our daily experience suggests this development activity is limited to a situation where a scheme has already secured a pre-let agreement for at least a partial element of the scheme. Development activity on a purely speculative basis however remains relatively rare. ”

The full report can be downloaded Here

*The report comprises an independent market survey of the European data centre industry, undertaken by iX Consulting, the specialist data centre consulting company.

*In total, responses were received from companies who controlled a combined data centre portfolio of just over 16 million sq ft of technical floor space.

*Respondents have a presence in 74 different cities or towns across 28 countries throughout Europe