Europe has second quarter with high demand for datacenters

Data center dark with glowing servers 3d rendering
Sheila Zabeu -

September 13, 2023

So far, the year 2023 has been marked by the second quarter with the highest demand for datacenters in the European Tier I market formed by the cities of Frankfurt, London, Amsterdam, Paris and Dublin, with an impressive 65% jump compared to the same period last year, according to a report by JLL, the commercial property and investment management company.

More specifically, there was 114 MW of absorption in the period between April and June, more than double the 51 MW recorded in the first quarter and the second highest absorption quarter ever recorded. In the world of datacenters, absorption is the capacity rented by customers during a specific period.

Frankfurt was responsible for much of the growth, with 44 MW of absorption in the second quarter, bringing the year-to-date total to 80 MW compared to 26 MW in the same period last year. In terms of supply, Frankfurt also saw significant growth in 2023, with 69 MW of new installations added in the first half of the year. Frankfurt’s colocation market reached 656 MW, with the total size increasing by more than 11 per cent in the first two quarters alone.

London remains the largest market, with a total of 902 MW representing 35 per cent of the total Tier I supply. The city has seen a significant drop in new installations added so far in 2023, just 7 MW. However, a number of new developments were announced in the second quarter.

Paris has seen 24 MW in new installations added so far, with a further 40 MW expected by the end of the year. Take-up in the second quarter totalled 23 MW, the busiest quarter since JLL’s research began tracking the data in 2016.

Dublin continued to register healthy levels of activity, with 12 MW added, increasing the total market by 6 per cent and reaching 199 MW.

Of the secondary markets, Madrid continues to grow, with a further 7 MW of new offers, bringing the total market to 97 MW.

Who is driving growth?

According to the research, the main driver of the high growth in demand is Generative Artificial Intelligence (AI). The need for high computing power to train AI models is driving changes in datacenter design itself, with GPUs taking the place of traditional CPUs. In addition, facilities are adopting liquid cooling technologies instead of the air version to keep temperatures within optimum limits. It’s no wonder that Marc Ganzi, CEO of DigitalBridge, a global digital infrastructure investment company, predicts that 80% of datacenter energy will be consumed by AI systems over the next 15 years and that an additional 38 GW of energy will be needed to meet demand.

Looking at it from another perspective, datacenters used to train AI models are less dependent on high latency, so being close to those who use the facility’s resources isn’t as important. For this reason, JLL hopes to see an approach that favours “bringing datacenters to where energy is available” rather than “bringing energy to where datacenters are located”. These locations may have renewable energy sources available, for example, or may not suffer from land and water shortages. In other words, JLL predicts that we will start to see a strategic geographical approach to choosing data centre locations.

“The race around Artificial Intelligence continues to drive datacenter growth and open up an exciting new chapter in this sector. The second quarter of 2023 saw yet another record in terms of demand for datacenters across Europe, with no signs of slowing down,” says Tom Glover, Head of Data Centers at JLL.

Foreign appetite

Australia’s largest pension fund is to invest €1.5 billion in one of Europe’s largest datacenter businesses with a view to the computing power needed to keep up with the boom in AI and cloud computing.

AustralianSuper is making an investment to acquire a minority stake in Vantage Datacenters in Europe and also in the Middle East and Africa, a company backed by DigitalBridge. Vantage EMEA is considered one of the fastest growing hyperscale data centre platforms in the region.

The investment, which represents AustralianSuper’s first major initiative in the hyperscale datacenter sector, will give the fund access to an attractive market with growth prospects.