Written by Toby Sterling
AMSTERDAM (Reuters) – Space shortages in Europe's data centers are worsening as soaring demand for AI collides with limited expansion possibilities, industry officials say.
“There's no relief in sight,” Kevin Restivo, head of European data center research at CBRE, said at a conference on the sector in Amsterdam on Tuesday.
Data center operators like Amazon, Microsoft, Google, Meta, Oracle and TikTok owner ByteDance are expanding as fast as possible.
But access to adequate space and electricity has not kept up. CBRE predicts average vacancy rates in Europe's biggest markets, Frankfurt, London, Amsterdam, Paris and Dublin, will fall to a new low of 8.2% in 2024, after ending 2023 at a record low of 10.6% I predict that.
And while rising data center prices are a bright spot for Europe's commercial real estate market, with operators benefiting, “there is less space than ever for European businesses and businesses,” Restivo said. he said.
Capacity in second-tier markets such as Berlin, Milan, Zurich and Warsaw is expected to expand by more than 10% this year, but vacancy rates there are also falling.
Steyn Grove, director of the Dutch Data Center Association, said calls for European “sovereignty” in cloud computing and AI are unrealistic.
He said Amazon, Microsoft and Google have the leverage to pay for scarce power and Nvidia data center chips.
“Dear cloud operators in Europe, we have high-quality operators here, both large and small, but they don't have the scale and ability to offer their customers like the US operators or the Chinese operators,” he said. They don't have that kind of toolset.”
Meanwhile, Europe has no coherent plan to deal with grid congestion and zoning, including the sentiment that it's not in my backyard.
“If you don't want the data center but want the rest, that's not realistic,” Grove said.
(Reporting by Toby Sterling; Editing by Alexander Smith)