- 2021 is shaping up to be a record year for new supply, with 400MW already in or through planning for development
- Frankfurt (with 137MW) will see the highest amount of new supply in 2021, followed by London then Paris
- There is currently 85MW of supply scheduled to come online across FLAP in Q4, we suspect local lock-down measures will lead to a reduction in this amount
- Vacancy rates for 2021 and 2022 are currently forecast at 22% and 27% respectively, however many of these sites are not yet under construction
QUARTERLY REVIEW
COVID-19 continued to impact the European data centre markets through Q3. Providers have had to carefully balance increasing requests for supply from the hyperscale market (take-up increased on a quarterly basis by 23%) with supply constraints. Shifts in enterprise demand created further challenges. We now know of almost 130MW of supply due to come online in 2020 that has been rescheduled for 2021. This is expected to contribute to what we predict will be a tsunami of new supply entering the market through next year, with at least 400MW already scheduled to come online. More than 200MW of that new supply is pre-let. The number of pre-lets signed across the market by hyperscalers grew through Q2 and Q3 with hyperscalers looking up to two years out to secure supply for expected new demand. This has occurred alongside the first sign of interest in hyperscale self-build activity outside of Amsterdam in the Frankfurt, London, Amsterdam and Paris (FLAP) markets (the largest four markets in Europe by supply). Such activity has led some to question what hyperscale demand for third-party leased sites will look like in the future? CBRE’s view is that hyperscale self-build and colocation will co-exist across the FLAP markets, with cloud providers creating new availability zones that will require additional colocation developments to meet rapid time scales. The FLAP markets have drawn an increasing amount of attention from investors looking for retrofit, greenfield and brownfield opportunities through 2020. Opportunities, however, are difficult to come by. This is fuelling interest in second-tier markets. We continue to see investment announcements across Europe, especially in locations such as Zurich (which we cover this quarter on Page 7). This quarter, we also take a look at what Equinix Metal means for the market as well as COVID-19’s influence on the enterprise markets.
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