Vacancy rates in major European datacentre hubs hit all-time low, CBRE data finds

Demand is fast-outstripping supply in terms of datacentre capacity across Europe, with quarterly market data from real estate consultancy CBRE revealing that vacancy rates have hit an all-time low across Frankfurt, London, Amsterdam, Paris and Dublin (FLAPD).

CBRE’s market tracker data shows that vacancy rates within the FLAPD regions fell below 10% for the first time during the second quarter of 2024, due to the challenges operators are facing meeting the growing demand for capacity from the hyperscale cloud and internet giants.

Its data shows that 155MW of datacentre capacity was taken up during the first half of 2024, but only 138MW of new capacity was delivered during the same time frame.

“A lack of available power and appropriate land makes it difficult for providers to build datacentres,” said CBRE, in its report. “Yet demand from large American technology companies has risen. Hyperscalers need more space to ensure their plans are met.”

As the report goes on to confirm, out of the 138MW of new datacentre capacity delivered in FLAPD during the first six months of 2024, only 30MW of that was delivered during Q2. And that was the result of a development in the “western corridor of London” coming online.

“No new datacentres were delivered in any other primary market of Europe,” the report stated. “However, there were 28MW of supply delivered to the 10 smaller, secondary markets of Europe tracked by CBRE.”

The London development is also the reason why CBRE is predicting that take-up rates within the capital will exceed those seen in other FLAPD regions except for Frankfurt this year.

“London take-up is expected to exceed all others except for Frankfurt this year due to new facilities in the western corridor primarily for hyperscalers. There are 130MW of take-up forecasted in London this year,” the report added.

And the issue of capacity supply constraints is not expected to improve any time soon, with CBRE forecasting that the vacancy rate will fall to 7.9% by the end of the year, marking the fifth consecutive year that vacancy rates have declined.

Kevin Restivo, head of European datacentre research at CBRE, said the situation is likely to have a knock-on impact on pricing in the datacentre market.

“Datacentre capacity is an increasingly precious commodity given the considerable demand for space and competition for it. Providers that can secure the necessary resource and build datacentres are able to command higher prices for the space,” he added.

A report by US-based market watcher Synergy Research Group confirmed this week that Dublin is the world’s third-largest hyperscale datacentre market, but – as detailed in CBRE’s report – that position is at risk because of the challenges operators are facing with trying to secure power in the region.

“Dublin remains a draw for organisations looking to serve Ireland or the wider continent … however, the lack of available power for datacentre providers due to an ongoing ban on applications for power imposed by [Irish electricity grid operator] EirGrid is a threat to the market’s long-term growth prospects,” the CBRE report stated.

“For now, there is a strong supply pipeline planned for 2024 and 2025 as operators were able to secure power before EirGrid’s decision or secure alternative sources of energy.”

The future of the London market look potentially brighter, on the back of the recent pledge by the government to lower the planning barriers to new datacentre builds as part of its push to improve the nation’s economic prospects.