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CBRE: Record colocation take-up will fuel growth of secondary European datacentre hubs

Latest quarterly colocation market tracker data shows take-up of colocation capacity across major European hubs continues to hit record levels, leading to overflow demand in other places too

The number of colocation hubs across Europe looks set to increase in the years to come, as demand for locally hosted hyperscale cloud and internet services grows, says CBRE.

The real estate consultancy’s fourth-quarter European colocation market tracker confirms that take-up within the four major datacentre hubs of Frankfurt, London, Amsterdam and Paris (FLAP) collectively hit an all-time high of 201MW over the course of 2019.

Such is the pent-up demand for colocation capacity within these areas that CBRE’s market tracker also revealed that a further 66MW had already been pre-let in facilities within these hubs that are yet to be built, and an additional 50MW is being considered for development.

“This 116MW of identified take-up underpins our prediction that 2020 will repeat the strong performance of 2019,” says CBRE’s market tracker report.

Nearly half (45%) of all the colocation take-up seen in 2019 was within the Frankfurt market, and it was the first year on record that the German city has emerged as the FLAP market’s star performer, and the first in which one European hub has achieved 90MW of take-up. 

“CBRE expects that take-up in the core FLAP markets will remain high at 200MW for the next two years, as the hyperscale companies continue to utilise wholesale colocation services in these markets,” said the market watcher.

As alluded to in past CBRE quarterly reports, the high demand for colocation capacity from the hyperscale community is continuing to create challenges for FLAP from a space and power availability perspective.

This has resulted in a temporary ban on datacentre development in certain parts of Amsterdam, which CBRE said will result in that hub seeing a year-on-year decline in new colocation capacity coming online in 2020.

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London is also on course to experience a year-on-year decline in new capacity coming online, which appears to be linked to the fact that there is already 190MW of spare capacity up for grabs in that hub.

“Like Frankfurt, all three hyperscalers are looking for significant capacity in London today,” said the CBRE report. “However, even strong take-up in 2020 may not have a significant effect on vacancy and market absorption, which will remain high over the next 12-18 months.”

Even so, demand for datacentre space in west London specifically has led to sites with what CBRE calls “unique attributes” being sold for more than double the residential price.

These market conditions have prompted some datacentre developers to start looking further afield for new, unproven locations for their facilities, including Spain, Poland and Switzerland, said Mitul Patel, head of Europe, Middle East and Africa datacentre research at CBRE.

“As the hyperscale companies roll out their services more widely across Europe, the rate of hyperscale procurement of datacentre capacity in other European cities will increase rapidly,” he said. “As a result, markets such as Madrid, Milan, Warsaw and Zurich will witness a substantial increase in colocation activity.”

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