The "Western Europe Data Center Colocation Market - Industry Outlook & Forecast 2024-2029" report has been added to ResearchAndMarkets.com's offering.

The Western Europe Data Center Colocation Market was valued at USD 6.90 Billion in 2023, and is expected to reach USD 10.35 Billion by 2029, rising at a CAGR of 6.99%.

In Western Europe's data center colocation market, major emerging markets for colocation data centers include Frankfurt, London, Amsterdam, Paris, and Dublin (FLAPD). London experienced a significant increase in data center proposals in 2023. Investments like Reef Group's 600MW campus in the London Borough of Havering, Vantage's 48MW campus, and Global Switch's 3.1MW data center reflect this growth.

The key drivers of the Western Europe Data Center Colocation Market are cloud computing and AI, as private and public sectors majorly adopt AI and cloud computing for their workloads. Around 71% of the UK public sector departments have transitioned from conventional data centers to cloud infrastructure, reflecting a significant shift in operational strategies.

As GenAI is booming and may lead to huge power consumption to meet the needs, colocation AI data centers plan to develop a strong computing infrastructure at both the network periphery and the central data center. Equinix, Vantage Data Centers, Data4, and Virtus Data Centres are among the key colocation operators in Western Europe that are deliberately pivoting to build data centers specifically for AI workloads. This move tackles electrical grid issues and the high power demand inherent with AI workloads by retrofitting existing facilities to meet AI demands. For instance, Data4 plans to retrofit its current campuses, with a 180MW site in Frankfurt and two in Paris (120MW and 250MW), as optimally suited for AI demands.

Power and land limits provide a significant problem in Europe's expanding data center ecosystem. Major hubs such as FLAPD have reached their highest capacity, leading to electricity grid and land constraints. Dublin, for example, is facing a de facto moratorium owing to grid restrictions, causing data center developments to halt. Furthermore, adjacent land prices in FLAPD regions are rising; property values in Slough alone have increased by more than 40% since 2019, while certain sections of London will not have electrical capacity for construction until 2035.

The FLAPD regions are currently facing constraints due to the ongoing investments in data centers that concern local governments regarding electricity consumption and land scarcity. Consequently, some regions, like Ireland, have imposed moratoriums on further data center development. Meanwhile, others resort to tactics like hiking grid and land prices, pushing data center operators to explore alternative locations in remote areas and invest in greenfield and brownfield projects on the outskirts.

In the Western Europe data center colocation market, major colocation data center investments in 2023 and 2024 have been made by Digital Realty, Equinix, NTT Global Data Centers, Colt DCS, Vantage Data Centers, Virtus Data Centers, and EdgeConnex. In addition, other notable investors include China Mobile, Iron Mountain, CyrusOne, Global Switch, Etix Everywhere, Green, Kao Data, Data4, Servecentric, Serverfarm, AtlasEdge, Keppel Data Centres, Pulsant, EXA Infrastructure, Ark Data Centers, Green Mountain, LDeX Group, Hivelocity, NorthC, Maincubes, and First Colo.

In 2023 and 2024, the Western Europe data center colocation market saw the emergence of new entrants such as CloudHQ, Digital Reef, EdgeCore Digital Infrastructure, Stratus DC Management, AQ Compute, Merlin Properties, and Form8tion Data Centers (backed by Thor Equities).

KEY TRENDS

Surge of 5G Connectivity and IoT in Edge Data Center Investments

In Western Europe, the adoption of 5G technology surged, achieving over 81% population coverage by the end of 2023. This rapid deployment drives innovation in edge devices, facilitates remote work, and supports integrating advanced technologies. UK and Germany lead in 5G adoption, while others such as Ireland, Netherlands, Portugal, Belgium, Luxemburg, and Spain are still in the trial phase and may soon join the 5G adoption.

Telecom operators will invest around $30 billion in Open RAN technology by 2030. Notably, Vodafone leads the charge for Open RAN in Europe, successfully deploying the technology in the UK and aiming for a similar rollout in Italy soon.

The surge in 5G adoption and the increasing need for connectivity in diverse areas and urban centers draw significant investments from edge data center providers. This surge is also projected to support the growth of the Western Europe data center colocation market. Also, edge data center players like EdgeConneX, Penta Infra, Portus Data Centers, Proximity Data Centres, I Squared Capital's nLighten, and AtlasEdge are actively expanding their footprint across key FLAPD regions, fueling the growth of edge infrastructure.

The proactive adoption of IoT technology in Europe solidified its status as a global frontrunner in the industry by ongoing strategic funding. Europe is poised to uphold its position as the third largest IoT market, following China and North America. Notably, within Western Europe, investments in IoT are projected to surge within the manufacturing, utilities, and professional services sectors.

In 2024, European IoT entities planned to invest approximately $260 billion in IoT solutions despite a recent slowdown attributed to geopolitical and macroeconomic factors.

Increase in Sustainable Initiatives

The European Commission actively seeks ways to enhance energy efficiency and promote sustainability within cloud computing and data centers. Its focus lies in improving energy efficiency, promoting the reuse of waste energy like heat, and increasing the utilization of renewable energy sources to achieve carbon neutrality by 2030.

In 2024, The German Energy Efficiency Bill was passed to reduce emissions by implementing energy efficiency standards across industries, including data centers.

Governments have long-established sustainability goals in Western European nations like the UK, Germany, Switzerland, Italy, France, Ireland, and the Netherlands. However, concerns have arisen in these countries about potential deviation from these targets due to significant data center investments and energy consumption. These countries actively collaborate to enhance their electrical infrastructure, aligning with policy shifts to promote renewable energy adoption and accommodate the expanding data center sector.

Digital Economy

Governments and organizations are launching measures to improve digital transactions, ICT skilled workforce, and smart payment systems to strengthen the digital economy. The Digital Europe Programme (DIGITAL), a new EU financing effort, aims to facilitate the integration of digital technologies among enterprises, individuals, and public authorities. The digital decade plan of the EU specifies digital transformation objectives, intending to have at least 80% of individuals with basic digital skills by 2030.

The European Commission's commitment to the Digital Europe Programme, with over $900 million allocated for 2023-2024, signals a strategic push toward bolstering digital infrastructure, including advancements in AI, cloud computing, and data utilization.

In January 2024, the Top Employers Institute acknowledged TCS for its dedication to empowering its EU workforce. TCS focuses on upskilling 20 million ICT specialists in Europe by 2030 and spearheads extensive training programs aligned with the European Digital Decade Policy Programme and the EU Pact for Skills.

Key Attributes:

MARKET DYNAMICS

Market Opportunities & Trends

• Rapid Implementation of AI
• Sustainability Initiatives Attract Data Center Operators
• Increasing Adoption of District Heating Systems
• Innovations in Data Center Technologies

Market Growth Enablers

• Growth in the Adoption of Cloud Services
• Increasing 5G Deployments Fueling Edge Data Centers
• Advent of IoT & Big Data Technologies
• Government Support for Data Center Developments
• Growing Submarine & Inland Connectivity

Market Restraints

• Supply Chain Disruptions Hamper Market Growth
• Security Challenges in Data Centers
• Location and Power Constraints on Data Center Development
• Lack of Skilled Data Center Professionals

VENDOR LANDSCAPE

Prominent Colocation Investors

• Aire Networks
• Aixit GmbH
• AQ Compute
• Ark Data Centres
• Aruba
• AtlasEdge
• Blue
• Castle IT
• China Mobile
• CKW
• Cogent Communications
• Colt Data Centre Services (Colt DCS)
• Compass Datacenters
• CyrusOne
• Data Castle
• DATA4
• Datum Datacentres
• Denv-R
• Digital Realty
• Digital Reef
• Echelon Data Centres
• EdgeConneX (EQT Infrastructure)
• Energia Group
• Equinix
• Etix Everywhere
• Euclyde Data Centers
• EuNetworks
• Exa Infrastructure
• Fibra Medios Telecom
• Firstcolo
• Global Switch
• Green
• Green Mountain
• Hivelocity
• Iliad
• Ingenostrum
• Iron Mountain (IO)
• ITENOS
• K2 Data Centres
• Kao Data
• KDDI
• Keppel Data Centres
• KevlinX
• LCL Data Centers
• LDex Group
• Liberty Global
• Maincubes
• Merlin Properties
• myLoc managed IT AG
• Nabiax
• Nautilus Data Technologies
• NDC-GARBE Data Centers Europe
• Nehos
• Nexspace
• NorthC Data Centres
• NTT Global Data Centers
• Orange Business Services
• Panattoni
• Penta Infra
• Portus Data Centers
• Prime Data Centers
• Proximity Data Centres
• Pulsant
• Pure Data Centres
• Redwire Data Centre
• Servecentric
• Serverfarm
• STACK Infrastructure
• Stratus DC Management
• T5 Data Centers
• Telecom Italia Sparkle
• Telehouse
• Titan DC
• Vantage Data Centers
• VIRTUS Data Centres (ST Telemedia Global Data Centres)
• Web World
• Yondr

New Entrants

• CloudHQ
• Form8tion Data Centers (Thor Equities)
• Global Technical Realty
• Goodman
• Mainova WebHouse
• Nation Data Center (NDC)

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