AMSTERDAM, Feb 27 (Reuters)—Industry participants said a shortage of space in European data centres is worsening as booming demand for AI collides with limited expansion possibilities.
“There is no relief in sight,” said Kevin Restivo, who heads European data centre research at CBRE (CBRE.N), during a conference on the sector in Amsterdam on Tuesday. Data centre operators such as Amazon, Microsoft, Google, Meta and Oracle and TikTok owner ByteDance are expanding as quickly as they can.
But suitable space and access to electricity are not keeping up. CBRE forecasts average vacancy rates across Europe’s biggest markets—Frankfurt, London, Amsterdam, Paris, and Dublin—will drop to a new low of 8.2% in 2024 after ending 2023 at an all-time low of 10.6%.
While rising data centre prices are a bright spot in the European commercial real estate market, and operators are benefiting, “there is less space than ever for the enterprises, for the businesses of Europe,” Restivo said.
Although capacity in second-tier markets such as Berlin, Milan, Zurich, and Warsaw is expected to expand by more than 10% this year, vacancy rates there are also falling.
Stijn Grove, who directs the Dutch Data Centre Association, said calls for European “sovereignty” in cloud computing and AI were unrealistic.
Amazon, Microsoft and Google have the clout to pay up for scarce power and data centre chips made by Nvidia, he said.
Meanwhile, there is no coherent European plan to address electrical grid congestion or zoning, including the “not in my backyard” sentiment.
“If you don’t want the data centre, but you want the rest, that’s not realistic,” Grove said.
