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European colocation market growth buoyed by M&A and Safe Harbour, says CBRE

Latest European datacentre market research from CBRE looks at effect of mergers and acquisitions and Safe Harbour on colocation adoption

The European datacentre colocation market continues to go from strength-to-strength, with investment in the sector nearing $9bn in 2014, according to research from global property advisor CBRE.

The organisation cited the rise in mergers and acquisitions in the colocation sector during the second quarter of 2015 as a key investment driver, and has fuelled market growth by 6% overall in 2015.

The second half of 2015 has seen Equinix make a $3.6bn bid to acquire fellow colocation provider TelecityGroup, a deal that looks set to shake up the competitive landscape across Europe in 2016. This is particularly in the wake of the European Commission’s ruling that both firms must sell-off some of their facilities in London, Amsterdam and Frankfurt for the deal to go ahead.

Aside from mergers and acquisitions (M&A) activity, the research picks up the uptick in interest from large-scale IT infrastructure and web companies in opening datacentres in Europe, with London emerging as the most popular location.

“IT infrastructure companies are dominating the European datacentre market. We’ve seen overall demand dynamics mirror what these firms are doing,” said Andrew Jay, head of datacentre systems at CBRE.

“The implications are wider as well, with operators seeing proof that deploying an on-off ramp to the cloud in a datacentre will attract enterprise customers, so securing the IT Infrastructure providers to your premises is becoming vital.”

The growth of the European datacentre market seems assured into 2016, thanks to the recent Safe Harbour ruling, added Jay, which has seen Microsoft, Amazon Web Services and others announce plans to open European datacentres.

“The issue of data protection has developed significantly since the Safe Harbour ruling. Such concerns have been important in keeping demand strong in Frankfurt, exemplified by Microsoft’s announcement of its partnership with Deutsche Telekom, and the expectation is that this theme will persist in the coming months with some markets gaining significantly,” added Jay.

As another indicator of datacentre market growth, the CBRE research also points to the increase in the power being supplied to the sector increasing by 11MW to 816MW in the last quarter of 2015 alone.

Megawatts (MW) have gradually taken over square metres as the preferred metric for colocation operators to demonstrate the capacity of their facilities, with many providers talking up the power requirements of their sites rather than the amount of space their equipment takes up.

However, to ensure its growth remains on a par with that seen in the major colocation markets worldwide, CBRE said Europe will need a “particularly strong” fourth quarter to reach the 60MW capacity mark for 2015.

Read more about colocation and datacentre trends

  • The amount of datacentre space occupied by colocation providers is up by 11% on 2014, and is forecast to maintain that level of growth through to 2018 as enterprises look to outsource more of their IT.
  • Digital Realty will buy US datacentre provider Telx for $1.89bn, as the major operators in the market consolidate their operations.

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