Online work and play powers data centre growth

As people consume more data than ever before, the growth of Europe’s data centres is accelerating

December 09, 2020

Data centres are proliferating across Europe amid surging demand for digital platforms and services as living and working moves online.

Planning applications in 2020 have already far exceeded those of last year, according to JLL. And next year is predicted to be another record year. Around 80 megawatts of deals reserved this year are due to come online in 2021, including an already completely pre-let site by hyperscale firm, Colt Data Centre Services, in Frankfurt.

It’s not all down to COVID-19, explains Daniel Thorpe, senior research analyst for alternatives at JLL.

“Cloud storage, more devices being connected to the internet, gaming and streaming services, as well as the imminent arrival of 5G, were already creating exponential growth in both data volumes and processing,” says Thorpe.

But demand moved up a gear as the pandemic hit, with more people using video calls to stay connected to colleagues, friends and family and e-commerce hitting record highs, not to mention increased cloud use by businesses. Take-up in Europe’s main data centre markets of Frankfurt, London, Amsterdam, Dublin and Paris this year is 143 megawatts (MW), an increase of 15 percent on the same point last year to a new total of 2076MW.

Data centres in growth mode

Both colocation providers, offering data storage space to rent to multiple companies, and hyperscalers like Google and Microsoft are now looking for space to grow.

In Ireland, for example, TikTok is to build a $500 million data centre.

Amsterdam, Dublin Frankfurt, London and Paris remain preferred locations, with take-up forecast to rise by around a third both this year and next year, according to JLL data.

Frankfurt recently overtook Amsterdam to become the second biggest colocation provider, increasing its space by 18 percent on 2019 and has seen the highest take-up of space of Europe’s five major markets.

However, less established markets such as Madrid, which has grown by five percent since 2019, are coming into play as viable alternatives.

Digital Realty’s Interxion, for example, recently purchased land in the Spanish capital for a 34MW data centre.

“Secondary locations in Europe are set for growth as the continued trajectory of Europe’s five main markets – doubling in size in under five years – is unsustainable,” says Thorpe. “Demand for lower latency connectivity means there’s more demand for so-called edge data centres, which are smaller and closer to the urban populations they serve.”

Serving data needs

Securing the right space remains a challenge in urban areas where developers face competition from the residential and warehousing sectors. The Municipality of Amsterdam, for example, initially blocked planning permission for data centres due to concerns of power consumption and land availability.

“In an already intensely competitive market, such restrictions have further challenged those looking to enter the sector, while driving up land prices in already core and sought-after markets,” Thorpe says.

At the same time, data centres themselves have their own needs. Capital expenditure on equipment and infrastructure within the industry is set to reach $200 billion globally by 2024, according to a Dell'Oro Group report.

A greener future

Amid a growing focus on sustainability, some of that expenditure will be required to further improve energy efficiency – although data centres already fare better than many other industries.

While the amount of computing they do has increased dramatically in recent years, they still account for only 1 percent of global energy consumption – the same as in 2010.

Nevertheless, as part of the European Green Deal, the European Commission has declared that data centres should be carbon-neutral by 2030. New data centres must have a PUE (Power Usage Effectiveness) of 1.2 or lower, while existing ones must be at 1.3.

It’s coupled with a growing corporate focus on their own carbon footprint – and how they use and store data as their operations become increasingly digital.

Continued innovation in areas such as cooling will be key, Thorpe says, pointing to examples such as investor CyrusOne’s work to heat Amsterdam homes as a by-product of its data centre cooling process. In Scotland, Microsoft has trialled underwater data centres, finding much lower server failure rates than at on-land servers.

“More innovation is much needed as 5G and the demand for low latency connectivity will massively boost data centre demand in 2022 and as more autonomous vehicles emerge, e-commerce grows, and more domestic appliances link up to the IoT,” says Thorpe.

“As the sector continues to evolve, we’ll see more efficient centres emerge – both large scale and smaller edge sites - and they’ll be closer to the urban areas they serve.”