Hyperscale and edge drive data centre demand as cloud adoption and AI take center stage

LONDON, 13 April 2023 – The mass adoption of cloud computing and AI is driving exponential growth for the data centre industry, according to JLL’s new Global Data Center Outlook. Accounting for 79% of overall demand, hyperscalers – predominantly the global cloud service providers, and edge data centres, smaller facilities located close to the populations and infrastructure they serve, are leading as the fastest growing segments of the data centre space. 

The report finds that the hyperscale market is expected to grow 20% from 2021 to 2026, as more major tech companies look to meet surging demand for data processing and storage requirements. With 314 new hyperscale sites in development globally today, that number is expected to surpass 1,000 by the end of 2024 – up from around 500 sites just five years ago.

The demand for digital infrastructure has accelerated data centre uptake in Europe, which grew 35% to 296 MW in 2022 in FLAP-D markets. A record 533 MW of pre-let deals took place in 2022, with London and Frankfurt accounting for 77% of overall volumes. Frankfurt, which saw an 18% increase in supply is leading the charge in the uptick of data centre activity across western Europe, followed by Amsterdam, Paris and Dublin.

Tom Glover, Head of Data Centre Transactions, EMEA, JLL said: “2022 was a record year for take up and new data centre supply added to the European market. We saw 300MW of new supply added to the Tier I markets – a 50% increase year-on-year, contributing to the market size of FLAP-D to reach 2,477MW, almost double in size from the end of 2016. As the reliance on digital technology increases, the data center industry will continue to experience impressive growth.”

The turn to sustainability

With the increasing demand for digital infrastructure, sustainability is now a top priority for data centre developers, operators and investors. Legislation and self-regulatory initiatives, including the Corporate Sustainability Reporting Directive (CSRD) and the Climate Neutral Data Centre Pact (CNDCP), are setting the standard to mitigate the climate impact of the industry in the region.

This push for climate-focused regulation is leading many data centre operators to examine reusing excess heat for wider district heating. Specifically, a new draft bill in Germany is calling for nearly a third of energy fed into data centres to be reused[1]. To support this sustainability shift, value-add opportunities such as redevelopment have encouraged data centre managers to start retrofitting old infrastructure across European markets, with two former Coca-Cola bottling plants being repurposed in Frankfurt and Madrid[2].

Jonathan Kinsey, Head of Data Centre Services, EMEA, JLL added: “With corporations and governments alike focusing on ramping up efforts to close the gap between environmental commitments and action in the race to net-zero, the data center industry is also facing increased pressure for more transparency of climate mitigation efforts and has been working towards more sustainable operations.

“Those who react the fastest and improve efficiency with both energy and water usage stand to benefit as environmental impacts remain top-of-mind for most leading companies.”

[1] Greenberg Traurig, ‘Draft German Energy Efficiency Act would impact the operation of data centres in Germany’ 2022

[2] Stack Infrastructure, ‘Stack Infrastructure to expand footprint into Frankfurt with 800 MW hyperscale data centre campus’, 2022