Knight Frank, the global property adviser, has released ‘The Knight Frank Data Centre Report’ for Q3, in partnership with DC Byte. The Q3 report includes new markets across the broader EMEA region, including Istanbul, Johannesburg, UAE and Moscow, reflecting rising demand for both accurate and timely data across an increasing number of geographies. The UK market coverage has also increased to cover Manchester and the North of England.
Q3 findings show that London was the top performing destination with 52MW take-up, with a year-to-date (YTD) take-up of 139MW; a significant rise on the 77MW recorded in 2019. Capacity in the capital has increased, with over 420MW of new schemes either live, under construction or phased.
Frankfurt is second in line with 25MW take-up in Q3 and 105MW YTD. Whilst Amsterdam saw the lowest take-up of the group - with no major transactions reported in Q3 and YTD take-up of 21MW - the moratorium on development has only recently been lifted and it is expected that the market will gain momentum in 2021.
The report also shows that across the lead markets take-up has outstripped new supply, with 77MW of take-up and only 21MW of new supply. This is a welcome change since in certain markets, especially Frankfurt, a substantial amount of speculative development activity is underway.
Overall, tier-two markets have generally reported strong take-up, with Copenhagen and Madrid the stand-out performers with 36MW and 12MW, respectively. Madrid has experienced a dramatic swing in demand, continuing to grow and attract new business, especially from large US public cloud providers and international wholesale colocation operators. While Paris only reported a modest 2MW of take-up in Q3, it has been the strongest performing growth market in 2020 with 38MW YTD take-up.
Stephen Beard, Partner and Head of EMEA and APAC Data Centres at Knight Frank, said: “The European markets covered by this report have seen an astonishing 128MW total take-up in Q3, around 56% of which was in the “Gigawatt” markets of Frankfurt, London, Amsterdam and Dublin. We’ve reported 37% in the second-tier markets of Madrid, Copenhagen and Paris, and 7% in the emerging, tier-three markets. We predict that the proportion of take-up in non-leading markets will continue to increase in 2021, driven in part by the continued maturation of Madrid, Warsaw and Copenhagen as regional data centre hubs, and from a resurgent Paris.”
In tier-three markets take-up has remained steady with Moscow reporting the highest Q3 take-up of 2.4MW and the United Arab Emirates, Johannesburg and Istanbul recording between 1-2MW. The highest performing tier-three market in for the first nine months of 2020 was Johannesburg with 14MW take-up, followed by Warsaw with 10MW. Interest in the Polish data centre markets has intensified following separate announcements in September 2019 by Google and May 2020 by Microsoft that they would be establishing new cloud regions within the country. The key German secondary markets of Berlin and Munich recorded 7MW take-up each.
Ed Galvin, Founder and CEO of DC Byte, said: “In short, demand for data centre space is increasing substantially and there are notable trends. The move towards self-build by the hyperscalers is having a significant impact on the levels of competition for available space, so the tendency is now for data centre developments to be more evenly spread around Europe rather than concentrating purely on the biggest ‘Gigawatt’ markets. We will of course see continued investment within the lead markets, currently on track for a vintage year, and will see strong investment across a greater number of locations than was traditionally the case. Investment activity will also increase as buyers seek alternatives to the office market which has been hammered by COVID.”
