European data centre markets set to grow by 15% in 2018

147MW of new supply projected for the remainder of 2018

-London breaks the 500MW mark – a first for any European city

2018 started with a flurry of activity in the major European colocation markets of London, Frankfurt, Amsterdam and Paris. These four markets were responsible for 36MW of take-up, the highest figure for any Q1 period and a 35% increase on Q1 2017, according to new research from CBRE, the world's leading real estate advisor.

This continued level of heightened take-up has been met with a substantial amount of development in the four markets. CBRE analysis shows a further 147MW of new supply that we project to be delivered in Frankfurt, London, Amsterdam and Paris in the remainder of 2018. This will bring new capacity in the full year to 187MW, a 15% annual growth.

Because of the high level of new supply, vacancy rates in Europe have recently come back in-line with the equilibrium of 20% - after being low for two years. However, to maintain a 20% vacancy rate, there will need to be 117MW of take-up in the next three quarters, at an average of 39MW per quarter.

As so much demand continues to be driven by hyperscale cloud, the actions of this handful of companies will dictate whether European markets are in equilibrium or over-supplied by year-end.

2018 provided the start to the year that we had projected, with significant activity on both the demand and supply-side. We expect to see this continue and will see an upturn in demand from enterprise companies, such as those from the automotive sector which begin to execute strategies around automation.

Consequently, access to the European markets remains a priority for developers and this will drive further announcements of new companies entering the European markets throughout 2018. We may also see significant platforms come to market as investors look to cash in on the high barriers to entry that are driving up pricing.

Mitul Patel, Head of EMEA Data Centre Research at CBRE