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​Cushman & Wakefield Identifies Emerging European Data Centre Hotspots

Cushman & Wakefield Identifies Emerging European Data Centre Hotspots in new report "European Secondary Markets: The Growth Story for the New Decade"
Reykjavik and Oslo are leading the way for Nordic data centre developments - with Stockholm lagging behind

Stockholm, 26 August 2020 – New research from Cushman & Wakefield has identified emerging hotspots for data centre development in Europe. Secondary markets are witnessing a boom in development with the industry responding to Covid-19 by launching development closer to users and investing large sums of capital in new platforms.

The European data centre market has long been dominated by the ‘FLAP-D’ markets of Frankfurt, London, Amsterdam, Paris and Dublin, cities with their own deep business and financial sectors to serve. While these markets are still critical to the data centre ecosystem as entry points - and with over 500 MW of construction underway among them - interest in the FLAP-D markets is now competing with physical limitations including a lack of energy to power the centres, limited stock and a need to be closer to regional users. These constraints have seen a host of new locations joining the data centre landscape as operators have responded to client demand across the region. The COVID-19 pandemic has only propelled this trend further as millions continue to work from home, seeing demand and opportunity deepen in secondary markets. 

Stephen Kirby, Partner, Data Centre Advisory at Cushman & Wakefield, added: “Increasing land values, limited power availability, data centre construction moratoriums within some FLAP-D markets and fibre connection latency demands has resulted in hyperscalers moving data centre workloads away from established markets and closer to their customers. This move has unlocked activity in emerging data centre locations. A wide array of pension funds, sovereign wealth, infrastructure funds and private equity firms see the investment potential in data centres and are circling the continent looking for an initial foothold in the European market.”

The cities listed in the European Secondary Markets: The Growth Story for the New Decade report are the vanguard of these emerging markets, each with their own local ecosystem of cloud services providers, developers, investors, and occupiers. Of the cities studied, Reykjavik (212 MW), Berlin (199 MW), Warsaw (128 MW), Oslo (125 MW) and Zurich (117 MW) and are currently on track to becoming the five largest secondary data centre markets in the next five to ten years. The greatest growth from current capacity is led by Berlin (+342%), followed by Reykjavik (+308%), Olso (+150%), Warsaw (+100%), and Zurich (+89%).

A popular alternative for closer deployments to the Americas while remaining in Europe, Reykjavik has served as a destination for high-performance computer needs and cryptocurrency mining alike thanks to the low-cost geothermal and hydroelectric power on offer. Recently-acquired Etix has one campus locally, while Advania, Reykjavik DC, and Verne Global all have their own options, with each offering expansion capability across several phases. An array of tax incentives and an amenable local utility are also on offer.  

As data centre operators and their clients aim at becoming greener, the low-cost hydropower on offer throughout Norway have served to make the area attractive for large deployments. The Norwegian government has assisted rolling out a package of energy and property tax incentives to attract hyperscalers. The Oslo co-location market is dominated by local players, including DigiPlex (three facilities), local internet exchange OS-IX (backed by Bulk Infrastructure), and Green Mountain with their major upcoming campus that will offer 75 MW of capacity at full buildout. Connectivity to the rest of Europe will become even quicker late in 2020, with the new 170-kilometre Skagenfibre cable linking Hirtshals in Denmark to Larvik and Oslo in Norway.  

Kevin Imboden, Research Director, Data Centre Advisory Group at Cushman & Wakefield, said: “The huge energy requirements of data centre sites are driving significant investment and development in markets that can leverage reliable, low cost green sources of energy such as hydropower, therefore markets such as the Nordics, which also benefits from close proximity to successful business hubs, are gathering considerable interest.”

Secondary Cities, anticipated growth:

Berlin: 45 MW -> 199 MW (+342%)
Reykjavik: 52 MW -> 212 MW (+308%)
Oslo 50 MW -> 125 MW (+150%)
Warsaw: 64 MW -> 128 MW (+100%)
Zurich: 62 MW -> 117 MW (+89%)
Milan: 61 MW -> 95 MW (+56%)
Stockholm: 40 MW -> 75 MW (+47%)

Secondary cities, anticipated MW capacity:

Reykjavik: 212 MW
Berlin: 199 MW
Warsaw: 128 MW
Oslo: 125 MW
Zurich: 117 MW
Milan: 95 MW
Stockholm: 75 MW
Madrid: 71 MW
Vienna 61 MW
Marseille: 50 MW 
Prague: 41 MW

Annika Edström, Head of What's Next at Cushman & Wakefield in Sweden, said: “When our international colleagues identify future data centre hotspots, the cities of Reykjavik and Oslo are gaining traction for investments in the Nordic region. Comparing Stockholm is currently lagging, a situation that is not beneficial for future digital development locally but which can also be a business opportunity. Data centers was listed as one of the segments expected to perform best in our C&W Investor Confidence Index for Sweden in Q2.“


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