Sector Profile: Data Centres

The UK’s data centre sector is experiencing rapid growth, driven by increasing digitalisation and the expanding needs of cloud computing and AI. This growth is reshaping urban and rural landscapes and presents both opportunities and challenges for developers, local authorities, and local communities across the UK.

Key Trends in the Data Centre Sector

The UK is continuing to witness a surge in data centre demand, particularly in and around London, which remains Europe's largest data centre market. However, the demand for larger plots and increasingly significant power requirements are forcing a trend of expanding beyond the capital. This includes regional hubs such as Manchester, Birmingham, Cardiff, and further afield into Scotland. This data centre investment through the regions is likely to accelerate due to the availability of power, and specifically renewable power.

The contribution of data centres to the UK economy, is estimated to be £4.6bn in revenue each year in the UK (2021) and is forecast to support a UK tech sector worth an additional £41.5bn and 678,000 jobs by 2025.

The demand for data centres mirrors the growth in cloud computing, IoT, and AI, requiring the sector to hyperscale operations. This growth is influencing how planners approach the integration of these facilities into urban and suburban areas.

Sustainability is also at the forefront, with operators increasingly adopting green technologies and practices. The UK government's commitment to net-zero emissions by 2050, along with the broader ESG objectives of operators, is driving innovation in energy-efficient data centre design and operation.

The UK Government has signalled that the growth of data centres will be a key part of its agenda with the importance of data centres being formally recognised in the consultation for an updated National Planning Policy Framework (NPPF).

Opportunities in the UK Data Centre Sector

The lack of national planning policy recognition to support the development of data centres has made decision-taking at the local level uncertain and ambiguous. The shortfall and delay in data centre delivery is culminating in a shortage of space to meet the ever-increasing needs of cloud computing and AI. It is considered that there is a need for over 2.5GW of new supply over the next five years in the UK, with current supply being well short of meeting this requirement. This has put at risk the ongoing digital transformation taking place across financial services, life sciences, healthcare, education among many other critical industries and services.

The NPPF consultation asked whether data centres should be prescribed as types of commercial development which could be capable (on request to Secretary of State) of being directed into the Nationally Significant Infrastructure Project (NSIP) regime. An alternative route through planning, using the NSIP route, would help remove much of the ambiguity experienced at the local decision-making level. It also provides data centre proposals with a clearer more logical approach to consenting at the central Government level, with decisions being taken in light of data centres’ significant economic impact and potential to drive substantial growth.

Challenges Facing the Sector in the UK

Power supply remains a critical challenge, especially in high-demand areas like London. The substantial improvements and capacity enhancements required to the National Grid and strategic power network will likely take some time to come through, however, this is a critical component to thereafter take advantage of burgeoning renewable energy production. As the UK continues to position itself as a leading global technology hub, the integration of data centres into urban and rural landscapes presents a complex challenge for the sector, and one that requires specific national policy direction.

The future of data centres in the UK will hopefully be supported through a seismic shift in national planning policy to formally recognise the critical importance of data centres to economic growth and supporting technological investment. Into the future, it will be important that the sector is seen to be adaptable, embracing new technologies and design principles to create resilient, sustainable urban environments that can support the digital economy while enhancing quality of life for local communities.

JLL Planning Expertise

Our JLL Planning Team has significant expertise in the data centre sector. This summer, JLL secured planning permission for a £350 million data centre for Kao Data, which, when it becomes operational in late 2025, will be Northern England’s largest facility. The 26,000 sq.m. data centre is targeting BREEAM Excellent and will be powered by 100% certified renewable energy and infrastructure which provides industry-leading power efficiency.

To find out more, please contact Data Centre specialists, James Sheppard (Senior Director), Mike Hopkins (Director) or Rachel Streeter (Senior Planning Consultant).

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