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Data center developers ride cloud demand across Europe

2 MIN READMarch 21, 2019
Market growth in data centers, an alternative real estate asset class that is attracting ever greater attention, remains robust, according to a recent JLL Data Center Outlook report. Global ‘absorption’ - the standard measure for data center growth, being the net increase in amount of power leased - was 775.0 megawatts (MW) in 2018, a year-on-year increase of 191.5 MW.  There continues to be strong Cloud adoption across the globe, particularly in Europe, where it accounted for 70% of absorption. 

Over the next three years, multi-Cloud adoption and the advent of 5G are expected to reshape the data center industry. The report states that providers are “strategizing their offerings to meet the growing need for long-term flexibility, while providing the space and power needed from large users.”

The 5G network will take time to materialise, but it is expected to impact data centers in three ways: increased speed will bring an influx of data; reduced latency will force data centers to locate closer to the user; and data centers will need to upgrade network infrastructure to handle new demand. Taken together, 5G and multi-Cloud adoption are expected to “force providers to adopt new ways of remote power monitoring and utilize different cooling methods.”
Blockchain - the underlying technology for cryptocurrency - is also noted as a potential driver for the growth of data centers, despite uncertainty about blockchain’s applicability in the digital economy.  Companies are expected to find new applications of blockchain technology over 2019 and data centers “will need to prepare for capacity planning and high-density computing.”

European cities entering hyperscale future

London set a new record for data center take-up in Europe in 2018, according to the report, with 69.0 MW net absorption. London remains the largest market in Europe, with total inventory of 578.0 MW. Hyperscale demand for space and power, as needed by large Cloud-based companies and platforms, is expected to be a main driver in 2019 and beyond, with new data center providers entering the market.

Frankfurt regained its place in 2018 as the largest mainland European market, with inventory of 320.0 MW. Demand is expected to remain strong in 2019, with new product being rapidly absorbed; new providers in Frankfurt include CyrusOne, a Dallas-headquartered data centre REIT. Amsterdam is Europe’s third largest market for data centers, with total inventory 294.0 MW; demand remains strong, driven by a continued draw-down of space and power by hyperscalers. 

Alternative real estate asset classes and investment opportunities will be discussed in further detail at Europe GRI 2019 in Paris on 11-12 September.
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