Data center vacancy rates are nosediving in Europe – here’s why that could be a problem
Data center vacancy rates are in freefall throughout Europe’s key regions, though experts have told ITPro that the industry can and must recover.
According to commercial real estate firm CBRE, co-location data center vacancy rates dropped below 10% for the first time ever in Frankfurt, London, Paris, and Dublin, a collection of regions known as FLAPD.
The vacancy rate now stands at 9.8% and CBRE expects that number to fall almost two percent more by the end of the year to a rate of 7.9%. Should that be the case, it will mark the fifth year in a row of declining vacancy rates.
Take-up for data center power far outstripped new supply, with the former recorded at 44MW compared to a new supply figure of 30MW. This means there isn’t enough capacity to meet end-user demand.
CBRE predicts similar situations across the range of regions it monitors, expecting 646MW of new supply to be delivered this year across 15 different markets compared to a demand of 693MW.
“Providers are finding it increasingly difficult to accommodate given a lack of available power and appropriate land in the primary markets of Europe. Data center construction is increasingly difficult in markets, such as Frankfurt and Amsterdam, where regulation features prominently in development plans,” CBRE said.
If demand continues to outpace supply, the data center industry could start suffering, causing knock-on problems for services reliant on this vital sector.
“Without careful management, there could be significant disruptions, including price increases, a potential overbuilding crisis, and decreased accessibility for smaller players,” Daniel Efrati, CEO and Cofounder of NED data centers, told ITPro.
It’s difficult to know how the industry would continue to function under such strain, though Efrati expressed that the market would be “unlikely to experience a catastrophic crash” despite current challenges.
“The industry is too vital to the global economy and digital infrastructure,” he added.
The data center industry needs a rethink
With the generative AI boom powering forward, those reliant on data centers are only going to continue upping their demand in terms of capacity. To solve both current and future problems, data center operators need to rethink their strategies.
“To level out supply and demand, data center operators should focus on improving efficiency, expanding into edge computing, using predictive analytics for better planning, and offering more flexible leasing arrangements,” Efrati suggested.
Niklas Lindqvist, Nordic General Manager at Onnec, had his own take on the situation, telling ITPro that data center operators must rethink the design of their physical locations to improve infrastructure.
Lindqvist said that operators should “invest in robust power infrastructure and devise efficient cooling solutions to prevent overheating to combat relentless energy consumption,” so as to drive down energy consumption.
This would at least address the current problem of power supply in FLAPD that CBRE draws attention to in its report, as data centers would need less supply on average to fulfill the demand of users.
A different approach to cabling – “habitually overlooked and under-budgeted,” Lindqvist noted – could also be a solution. It can be “extortionately” expensive to replace and so should be purchased with power efficiency in mind.
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