European data centers struggle with AI-driven demand for space

European data centers struggle with AI-driven demand for space
European data centers struggle with AI-driven demand for space

The shortage of space in European data centers is intensifying as surging demand for AI collides with limited expansion options.

According to industry participants, the shortage of space in European data centers is growing as rising demand for AI collides with restricted development opportunities.

“There is no relief in sight,” said Kevin Restivo, CBRE’s head of European data center research, during a sector conference in Amsterdam on Tuesday.

Amazon, Microsoft, Google, Meta, and Oracle, as well as TikTok owner ByteDance, are rapidly expanding their data centers.

However, sufficient space and the availability of electricity are not keeping up. CBRE predicts that average vacancy rates in Europe’s largest markets—Frankfurt, London, Amsterdam, Paris, and Dublin—will fall to an all-time low of 8.2% in 2024, down from 10.6% in 2023.

While soaring data center pricing is a bright spot in the European commercial real estate market and operators gain, “there is less space than ever for the enterprises and businesses of Europe,” Restivo stated.

Although capacity in second-tier markets like Berlin, Milan, Zurich, and Warsaw is likely to increase by more than 10% this year, vacancy rates are also declining.

Stijn Grove, director of the Dutch Data Center Association, said aspirations for European “sovereignty” in cloud computing and AI were unrealistic.

He added that Amazon, Microsoft, and Google had the clout to pay for Nvidia’s scarce power and data center chips.

“European cloud operators, there are good quality operators here large and small, but they’re not the size of these American players or Chinese players, and they do not have the same tool sets that they can give their customers,” he went on to say.

Meanwhile, there is no cohesive European strategy for addressing electrical grid congestion or zoning, including the “not in my backyard” mentality.

“If you don’t want the data center, but you want the rest, that’s not realistic,” Grove went on to say.

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