2017 proved to be a second consecutive blockbuster year in the four largest European data centre markets of Frankfurt, London, Amsterdam and Paris (FLAP). The year has cemented an era of the new-norm, whereby European data centre activity is double that of each of the five years prior to 2016, according to CBRE, the global real estate advisor.
Global Data Centre Mergers & Acquisitions were a key feature of 2017. Globally there was over $25bn worth of M&A in the sector, over three times the 2016 level, with several key transactions in Europe. CBRE expects this trend to continue into 2018 as the weight of capital wanting exposure to the European markets remains high.
The year also saw a 21% increase in supply across the four FLAP markets. This equated to a record 202MW of new data centre capacity, 70MW more than any other year on record, underlining the enormous confidence in the sector. There is a strong supply pipeline of further supply in the core markets, CBRE has identified 180MW of supply scheduled to come online in these markets during 2018.
There was 119MW of total take-up across these four markets, in-line with CBRE’s prediction from Q2 that the full-year would see 120MW. This demand was again predominantly driven by cloud companies, with London benefitting most; the UK capital was responsible for 45% of total take-up across the four major markets, equating to 54MW. CBRE expects another strong year for demand in 2018 and we are predicting over 100MW of take-up for the third-consecutive year.
Mitul Patel, Head of EMEA Data Centre Research at CBRE commented:
“2017 has shown that the heightened level of activity across the European data centre markets is here to stay. In 2018, this level of activity will continue to be driven by the hyperscale companies which continue to use data centre providers to increase their capacity in the major cities. We may also see more build-to-suit style transactions in the major markets.
“We also expect that 2018 will be the year that sees the first significant activity from the large Chinese tech companies procuring significant data centre capacity in Europe, with several already engaging in active searches.
This elevated market activity will only increase investor appetite for exposure to the European markets; and this demand will keep prices at historically high levels.”
