Limited Available Land and Power Hamper Data Center Growth in EU and US

data centers

Worldwide demand for data center space remains high, according to datacenterHawk’s just released Q2 data center analysis report. High data center demand is present in both Europe, the U.S. and APAC. Due to the scarcity of land sites and adequate power infrastructure suiting long-term development, new opportunities are relatively constrained in several key markets across Europe.

The 2Q 2022 Data Center Market Recap published by datacenterHawk highlights the market’s dynamic growth in North America and Europe as well as its quick expansion in APAC. This comes after their 1Q 2022 summary, which revealed record-breaking global data center demand in all three of these areas.

“The data center industry finds itself in a new position at the 2022 mid-point,” said David Liggitt, President at datacenterHawk, a company that was acquired by private equity firm Leeds Equity Partners earlier this month. “Both increased demand and impacts from supply challenges around the world have created an environment where both data center users and operators are aggressively working to ensure they have the runway to meet their future needs or customer demands. This has resulted in increased site acquisitions, interest in new markets, interest in new areas within current markets, and increased pricing. Supply growth is at heights not seen before, all while data center user requirements have grown in size and number. This opens the door to numerous opportunities for users, providers, investors and consultants in the space, making the rest of 2022 exciting to watch unfold.”

Prospects for Further Growth

According to datacenterHawk, global data center market highlights include the following:

  • North America – With primary vacancy rates currently averaging their lowest point ever seen, the second quarter of 2022 marks another robust time of expansion in the North American market. While some markets have the capacity to meet demand, many are supply constrained, and business owners are looking for ways to expand swiftly. Although the major data center markets in North America are still expanding, issues with power delivery and site availability are forcing some demand to other locations, creating a chance for increasing activity in places like Salt Lake City, Richmond, and Austin. As operators contend with inflation, rising site acquisition costs, and leverage brought on by a lack of choice availability in the majority of markets, price hikes are anticipated to continue.
  • Europe – Users at the enterprise and hyperscale levels are still quite active in Europe. The first quarter of 2022 saw the highest demand for the combined Frankfurt, London, Amsterdam, Paris, and Dublin (FLAP-D) markets, but the second quarter of 2022 saw growth that was even higher. Frankfurt is still seeing substantial expansion. However, due to a shortage of readily accessible power infrastructure and land sites appropriate for long-term development, new potentials are relatively constrained in a number of important markets. Data center space will continue to be in high demand, opening-up prospects for growth in secondary and new markets.
  • APAC – In the APAC area, there is still a considerable need for data center space. The supply of many important markets is constrained, and new markets have continued to emerge, a clear trend since 1Q 2022. The nature of the area makes it challenging to create a true data center hub, necessitating growth near significant urban areas or commercial hubs. Sydney, which has more than five times more planned power than Hong Kong and Singapore combined, saw a major increase in planned power while it remained largely unchanged in Hong Kong and Singapore. The permitting and development process has been made easier thanks to Australia’s pro data center sentiment and ability to establish data centers as ‘state significant development,’ which has allowed the market to expand quickly in the second quarter of 2022.

The datacenterHawk team uses its own standardized approach to provide users with real-time data that enables them to find, follow, and analyze trends and pricing from over 35 different markets across the North American, European, and Asian Pacific (APAC) areas.