Strong demand for data centre capacity and a lack of available power in many key markets globally are keeping vacancies low and pushing rents up despite robust construction activity, according to a new report from CBRE.

CBRE’s first Global Data Centre Report analyses key variables, such as total inventory, vacancy rates, net absorption, pricing and rental rates, and availability, in established and emerging markets across North America, Europe, Asia Pacific and Latin America.

Despite strong near-term market fundamentals, power supply constraints could limit or delay development in markets such as Frankfurt. However, such constraints are fuelling demand in emerging markets where power is available, such as Milan. As a result, the total capacity of Milan is projected to almost double from Q1 2023 to Q4 2024 in the city, according to the research.

Data centre inventory continues to climb in many markets, despite power and land constraints. In the European markets, almost half of the new supply expected this year will be delivered in London and Frankfurt, both of which are popular locations for hyperscalers as they try to stay ahead of the demand for their services.

“Strong demand for data centres is driving the response of the supply pipeline, and with the rapid growth of artificial intelligence and other technologies such as gaming, streaming and self-driving cars, demand is only going to increase further” said Andrew Jay, Head of Data Centre solutions for Europe at CBRE.

Even with new development, vacancy rates remain low. According to the research, Frankfurt has the lowest vacancy rate across the top five European markets. Vacancy dropped to an all-time low to 4.8% in Q1 2023, from 8.6% a year earlier. 

“Data centre providers are faced with a dichotomy” said Kevin Restivo, Data Centre Research Director at CBRE. “Demand for capacity in absolute terms has never been higher across the top five markets in Europe. Conversely, there is a shortage of available power to varying degrees in those markets and many other key European metro markets, which is making it difficult for data centre providers to meet that demand.”

 To read the full report, click here.