CBRE predicts strong growth for European colocation firms in 2023, but suggests tough times ahead
The main colocation hubs of Europe are anticipated to see report quantities of take-up in 2023, but CBRE predicts the softening demand for cloud companies might result in a decline in how a lot datacentre capability the hyperscalers need in the long run.
The actual property advisory has printed the most recent model of its quarterly colocation market tracker, which retains tabs on the availability and demand charges for colocation capability in the key European hubs of Frankfurt, London, Amsterdam, Paris and Dublin (FLAPD).
The tracker report predicts the FLAPD markets are all “poised for another year of considerable growth” regardless of a notably downbeat efficiency – in provide and take-up phrases – through the first quarter of 2023.
During the primary three months of 2023, 2.9MW of provide got here on to the market, which is the bottom quantity delivered in any quarter for greater than 11 years, confirmed CBRE, but it mentioned a “substantial increase in supply” is predicted to happen through the second half of 2023.
The similar quarter additionally noticed 28MW of colocation take-up too, which is a fraction of what occurred in the earlier quarter, when there was 202MW of take-up reported.
Despite this, and the financial uncertainty in Europe, CBRE is forecasting a complete of 480MW of colocation take-up throughout 2023.
Specifically, it predicts greater than half (56%) of this take-up will happen in Frankfurt and London, with the hyperscale cloud and web giants anticipated to be accountable for nearly all of it.
In the long-term, although, CBRE mentioned it anticipates a slowdown in due course in phrases of hyperscale demand, given the likes of Amazon Web Services (AWS) and others have reported a slowdown in their annual growth charges throughout their most up-to-date run of economic outcomes.
“Demand on the part of the hyperscalers, the industry’s largest customers, is expected to remain strong for the foreseeable future, though their collective appetite for capacity is expected to decline in concert with lower growth rates,” the CBRE report acknowledged.
“As a result, the medium- to long-term outlook is less certain for providers as the higher cost of capital, labour and power shortages – and long equipment lead times across Europe – will make the delivery of projects more difficult, with profitability harder to ascertain.”
Kevin Restivo, director of European Data Centres Research, mentioned that regardless of the macroeconomic challenges the sector is going through, 2023 is on the right track to be a very good yr.
“We expect momentum to gather over the year in the FLAPD markets as operators deliver facilities to meet growing levels of demand,” he mentioned. “As a result, we are on track for unprecedented levels of new supply this year, much of which we expect to be pre-let to single tenants, notably in the tech sector.”
