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CBRE: European colocation market adjusts to 'new' high-growth norms in 2017

As the take-up and supply of datacentre capacity across Europe continues to hit new heights, CBRE claims the colocation market is entering a phase where high growth is becoming the "new normal"

The European colocation market is entering a new phase, where the record levels of investment and take-up seen in the sector the past few years have become the “new normal”, claims CBRE.

The claim comes amid the publication of the real estate consultancy’s fourth quarter datacentre tracker for 2017, which also features a full-year analysis of the investment, take-up and supply trends seen within Europe’s four largest datacentre hubs. These include Frankfurt, London, Amsterdam and Paris (FLAP).   

CBRE’s figures show there was a total of 119MW of take-up recorded across the FLAP markets in 2017, down from 155MW in 2016, with 33MW of this capacity being acquired during Q4 alone.

“This makes 2017 the second consecutive year with over 100MW of take-up,” states the CBRE report. “This figure means there has been nearly 275MW of take-up in the past two years. This is more than the four previous years and reinforces the new norm where market activity is now established as double that prior to 2016.”

As previously predicted by CBRE, 2017 has proven to be another record-breaking year for the London colocation market, in terms of both take-up rates and supply.

Breaking down these figures further, CBRE revealed that 13MW of the Q4 take-up occurred in London, and was principally driven by “two hyperscale cloud requirements closing before the end of the year”, with more pegged for delivery during Q1.

“The UK capital was responsible for 45% of total take-up across the four major markets, equating to 54MW. CBRE expects another strong year for demand in 2018, and we are predicting over 100MW of take-up for the third consecutive year,” said CBRE.

Read more about European colocation trends

Europe – as a whole – saw unprecedented levels of Mergers and Acquisition (M&A) investment during 2017, to the tune of $25bn, which CBRE’s figures show is more than three times the amount seen over the course of the previous year.

The supply of empty colocation space soared by 21% across all four of the major European colocation hubs, resulting in the creation of a record 202MW of new datacentre capacity – which is 70MW more than any other year on record.

Mitul Patel, head of EMEA datacentre research at CBRE, said all the signs suggest the growth trends seen throughout 2016 and 2017 will carry on into this year, fuelled by the continued demand for colocation space across Europe from the hyperscale cloud giants.

“2017 has shown that the heightened level of activity across the European datacentre markets is here to stay,” he said.  

“This level of activity will continue to be driven by the hyperscale companies which continue to use datacentre providers to increase their capacity in the major cities.”

Overseas investment

To this end, CBRE is predicting take-up will exceed 100MW across Europe over the course of 2018, and that – from an investment perspective – the market’s attractiveness to overseas investors will continue to rise.

“We expect that 2018 will be the year that sees the first significant activity from the large Chinese tech companies procuring significant datacentre capacity in Europe, with several already engaging in active searches,” said Patel.

As an example, Chinese public cloud giant Alibaba has outlined an interest in courting the European market in the past, having previously committed to opening a datacentre in Germany. It seems others are now following suit.

“This elevated market activity will only increase investor appetite for exposure to the European markets; and this demand will keep prices at historically high levels,” he said.

Read more on Datacentre capacity planning

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