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London overtakes Amsterdam as most in-demand location for datacentre space

Research from real estate advisory organisation CBRE shows demand for colocation space in London continues to grow, outstripping Amsterdam

London has overtaken Amsterdam as the leader of the colocation market, with adoption of datacentre capacity higher there than in any other European city over the past year.

That’s according to figures released by real estate advisory firm CBRE, which revealed that 25.9 MW of colocation capacity was purchased in London during 2015, while – in Amsterdam – 17.9MW changed hands.

“London continued its recent fine form to end 2015 with 25.9MW of take-up in the year. This figure was substantially above its 2014 figure of 18.4MW and boosted by three consecutive quarters as Europe’s most in-demand market,” the CBRE noted.

“Amsterdam was always going to find it tough to reach the levels of 2015, but a strong Q4 performance added gloss to what could have been a particularly poor year otherwise.”

Much of the demand for colocation space in London was driven by the retail sector, which purchased more than 10MW of the total capacity sold in the city last year, the CBRE’s research showed.

“We expect London to continue to thrive during the early parts of 2016 as planned new facilities and continued take-up from the IT infrastructure universe continue to keep the market buoyant,” the report stated.

Andrew Jay, head of datacentre solutions for Europe, Middle East and Africa (Emea) at CBRE, said a lot of the increased demand for datacentre capacity was due to the activities of US firms.

“Today, most substantial new requirements are led by IT infrastructure firms coming out of the US West Coast. In essence, these companies – which are few in number – are single-handedly shaping the European markets,” said Jay.

“As we move through 2016, the expectation is we’ll see a surge of activity in Q1 and Q2, again driven by infrastructure companies, given the market is now primed for large-scale deals.

“Finally, concerns remain regarding data protection and privacy exacerbated by the European Court of Justice’s recent ‘invalid’ ruling with respect to Safe Harbour. We think this will have a positive impact on demand in the smaller European markets.”

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Soaring demand

Across the main European markets – which CBRE counts as Frankfurt, London, Amsterdam and Paris – the total supply of colocation capacity topped 827MW, up from 771MW in the fourth quarter of 2014. This represents a 7.2% rise overall.

Over the coming year, the CBRE predicts demand for datacentre capacity will continue to steadily rise in Europe, as enterprises seek to outsource more of their IT infrastructure to third parties.

“In general 2015 levels of take-up across the European datacentre market were buoyed by a positive economic outlook and general market confidence,” the CBRE report stated.

“Whilst economic growth was not uniform across the region, the underlying drivers of demand for datacentre space appear to have remained solid in traditional and emerging markets.

“The trend to outsource IT infrastructure to third-party providers has remained an important characteristic across Europe and evidence from this final quarter of the year suggests this should continue.” 

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