European data centre vacancy falls to historic low

London, 6 October 2011 – Global economic instability continues to hinder the ability and appetite of corporate occupiers to advance comprehensive IT investment plans according to new research from CBRE.

Following an encouraging start to the year, where a number of significant deals were completed, spending on IT has come under progressively greater scrutiny as short term budgets are considered. Consequently, this has led to a slowdown in market take up as acquisitions take longer to complete and space requirements are reviewed and revised.

Despite this, market availability has continued to decline with the level of available space in the European Tier 1 market falling by 18% in the past 12 months. The overall vacancy rate is now at 17.39%, a historic low. The lack of new supply during this time has been fundamental to this sharp drop, with overall supply having risen by just 0.3%, the lowest rate of growth since the dotcom crash of 2000.

Commenting on the findings of the report, Andrew Jay, Executive Director, Data Centres at CBRE said:

“Corporate spending on IT continues to be selective as budgets for this year have remained under pressure. Some pockets of corporate demand for space have been evident as critical improvement and maintenance measures have progressed. Additionally, the drive to achieve greater efficiency through technology has borne some new demand, with the acceptance of cloud computing becoming more widespread.”

Indeed a recent report by Forrester Group suggests that by 2020, the value of the cloud computing market is expected to reach US$241 billion globally, as companies continue to exploit the advantages associated with outsourcing.

Notable examples of cloud expansion and the move toward outsourcing include Domino’s Pizza, which has selected Rackspace Hosting in the UK to provide it with an integrated cloud hosting service, whilst European law firm Olswang has appointed Glasshouse Technologies to manage and streamline its IT operations.

Andrew Jay continued:

“With corporate requirements being scaled back at present, we are likely to continue to see demand disparities among major data centre hubs. Amsterdam for example has strategic importance for telecoms and IT companies and as such is recording a sustained increase in demand this year. By contrast we are seeing locations with a high corporate occupier base experiencing more challenging business conditions.”

CBRE’s European Data Centres report is the only comprehensive research of its kind, and examines five key European markets: London, Amsterdam, Paris, Madrid and Frankfurt.