- COVID-19 is having some impact on the data centre market
- Drop in estimated take up in 2020 from original estimate of 197MW made in Q4, 2019, to 184MW
- That could change through H2, as markets either suffer new lock-down measures or rebound
- Development of some data centres scheduled for 2020 are being pushed to 2021
- 65MW of new supply has come online during H1, mostly in Frankfurt and Amsterdam
- Absorption rates in London, Paris and Frankfurt are decreasing
- Hyperscalers are still driving demand in terms of size of deals across FLAP
QUARTERLY REVIEW
While Q1 was a story about increased demand as a result of COVID-19, as Europe moved online, Q2 has been a tale of suppressed supply. We can now see that COVID is having an impact on the data centre market in Europe beyond limitations on customer access. Many build projects have experienced delays as on-site access was restricted and planning departments take longer to meet requests across all FLAP (Frankfurt, London, Amsterdam and Paris) markets. Some build projects scheduled for Q2 are now moved to Q3, Q4 or beyond. This does not mean the markets are not experiencing demand – in some markets we see incredibly low vacancy rates. This is despite some client engagements being placed on hold (especially in the enterprise market where companies are reassessing IT priorities and architectures). The market has seen some growth in supply, just not at the rate we have become accustomed to during 2019 – a record year for growth. A number of large-scale deals have also been signed. Providers have reported increased demand for cross connects, and connectivity services and an uptick in carrier activity. Another trend seen in London and Frankfurt, accelerated by COVID-19, is land price inflation resulting from high demand in the logistics sector – a result of the online retail boom. This is forcing companies to consider new locations away from the traditional logistics – and data centre – hubs.
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