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The amount of spare datacentre capacity in four major European cities is at its lowest level since the end of 2013, as cloud providers respond to user demand for locally hosted services.
According to CBRE’s quarterly review of datacentre supply and demand in Frankfurt, London, Amsterdam and Paris, the amount of datacentre space taken up during the first quarter of 2016 was well above average.
The three months to March 31 saw a total of 19.4MW of IT power sold, whereas the CBRE claims a quarterly take-up of around 15.8MW is more typical in these four markets, leaving spare capacity in short supply.
Speaking to Computer Weekly, Mitul Patel, associate director for datacentre systems at CBRE, said the uncharacteristically high demand for datacentre space in the first quarter was driven by IT infrastructure and cloud firms looking to build out their presence in Europe.
“The increased activity by IT infrastructure firms is really driving the market, and that’s a continuation of what we’ve seen for the past year and half,” said Patel.
“Every time you start to think these big infrastructure and cloud firms must be finished because they’ve deployed so much kit, they suddenly go back and deploy more. I don’t think you can underestimate how critical the activities of these firms are to the overall demand for capacity.”
Safe Harbour uncertainty drives firms to Europe
The uncertainty surrounding the successor to the Safe Harbour US data transfer agreement is motivating more IT infrastructure firms to consider datacentres in Europe, added Patel.
“When you look at the types of firms Safe Harbour and newer data transfer agreements would apply to, a lot of them are cloud companies. The uncertainty over Safe Harbour has led to people needing a more dispersed model over a centralised one,” he said.
For example, a lot of US firms built out datacentres in Ireland to serve Europe before the Safe Harbour agreement was ruled invalid in October 2015, but now face needing to build further ones in the countries where their users are based.
“A lot of them served Europe from Dublin initially. They did this mainly for corporate tax reasons, and because of the the Irish-US connection and the fact Dublin is the first landing port for the US from Europe,” said Patel.
“When the data transfer regulations were considered pretty sound and Safe Harbour was seen as a fairly valid means of data transfer, you could serve large parts of Europe from Dublin. Now people are moving to host services in the individual countries.”
The final three months of 2015 saw similarly high levels of demand for datacentre space in Frankfurt, London, Amsterdam and Paris (Flap), which is surprising, said Patel, as successive quarters of growth are relatively rare.
“The fourth quarter was particularly strong with 20 MW of take-up, so we’ve had two quarters with a combined total take-up of 40MW, which is fairly unusual,” he said.
“The kind of volatility we usually see, quarter-on-quarter, normally does not allow for two consecutive big quarters, and it’s more common to see one big quarter followed by a slightly quieter one.”
The performance of the London and Frankfurt markets drove much of the demand for datacentre space during the quarter, as these areas are where 73% of the IT power taken up in Flap is situated.
The amount of datacentre space in the region reached 830MW during the first quarter, with just 139MW of it lying unused. According to CBRE, the latter figure is the lowest it has been since the fourth quarter of 2013.
London has seen a distinct lack of substantial new datacentre space for the past three quarters, the CBRE report notes, where the amount of available supply is now 16MW lower than this time in 2015.
“New supply in 2016 will include Gyron in London, further phases at Interxion in Frankfurt and Amsterdam, as well as the ongoing possibility of Infinity launching the Here East scheme in London,” the report states.
Amsterdam, however, has brought online around 15MW of new datacentre space during the past 12 months, making it the biggest source of new capacity in Flap.
“We saw a big move towards Amsterdam in 2014, when cloud companies started driving demand for the first time, and it is the best connected port in Europe,” said Patel.
“If you want really fast connectivity, it makes sense to go to Amsterdam first. London has emerged in the past year or so as the logical next step for those firms,” he said.
Despite a strong start to 2016, Patel predicts the rest of the year should pan out to be largely the same as previous ones, with the take-up of colocation space continuing at a similar pace.
“We’ve seen a high quarter, but over the past three years we’ve seen a fairly stagnant overall annual picture since 2013. Don’t get too carried away with spikes and volatility from one quarter to the other, as the signs suggest 2016 will be fairly similar to previous years,” he said.
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