CBRE: Spare datacentre capacity levels to hit all-time low across Europe by end of 2024

The amount of spare datacentre space across the whole of Europe is expected to hit a record low by the end of 2024, with CBRE citing a predicted surge in demand for spare capacity as the cause.

As previously reported by Computer Weekly, vacancy rates across the five core colocation markets of Frankfurt, London, Amsterdam, Paris and Dublin (FLAPD) fell below 10% for the first time in the second quarter of 2024.

However, when factoring in the amount of available space across the primary (FLAPD) and secondary markets in Europe, vacancy rates are expected to hit a record low of 9.7% by the end of 2024. According to CBRE’s figures, the vacancy rate across FLAPD is already 9.4%.

This represents a sizeable quarterly drop, as – at the end of the third quarter of 2024 – the vacancy rate across Europe was 11.9%.

“If that expectation comes to fruition, it will be the first ever time that the European annual vacancy rate has closed in single-digit territory,” said CBRE, in a research note.

The short supply of spare datacentre capacity across Europe is the result of the hyperscale cloud and internet giants and their seemingly insatiable demand for datacentre space, particularly as they seek to deliver on their artificial intelligence (AI) strategies.

At the same time, datacentre operators across Europe have run into trouble when trying to build new facilities, due to a lack of suitable sites and power supply issues, or – in some cases – because governments have introduced temporary bans on new datacentre developments.

“Take-up regularly exceeds the new supply delivered in most large European metro markets,” continued the CBRE research note.

“Annual take-up, which CBRE believes will reach 705MW, is expected to exceed the expected level of new supply (644MW), and the vacancy rate is set to fall further this year in the 15 European markets that CBRE tracks.”

It added: “There will be an estimated 456MW of available capacity by year end in Europe; marking the lowest year-end total since 2018 when there was 359MW. However, the market was nearly a third of the size in 2018, compared to the predicted 4.7GW of capacity that has been delivered in Europe at the end of this year.”

CBRE has previously warned that with datacentre capacity becoming an increasingly scarce resource in Europe, this could lead to operators having to pay higher prices to secure sites.

Kevin Restivo, head of European datacentre research at CBRE, said with vacancy rates set to drop further, operators might need to take a longer view of their datacentre investments.

“With vacancy rates across Europe expected to drop to record lows, organisations are struggling to source the capacity required to support their growth plans,” he said.

“Given the lack of availability in primary markets, we are seeing some organisations turning to smaller markets as a solution. Buyers need to take a long-term view of the market if datacentres are to be an integral part of their business and IT strategies.”