Market Trends of Europe Data Center Construction Industry
United Kingdom leads the market with significant market share
- The digital economy in the United Kingdom accounted for more than 7% of the country's GDP in 2022. This upward trend continues, following the work-from-home culture creating demand for enterprise cloud and Software-as-a-Service (SaaS) utilities, as well as e-commerce, social networking, search, streaming video services, gaming, and mobile apps.
- The adoption of OTT in the country is relatively high, and nearly 30.7% of TV households subscribed to an SVOD package in 2021. YouTube and Facebook were the most prominent social video platforms in the United Kingdom, reaching over 95% of UK internet users in 2021. Therefore, the construction of data centers in the United Kingdom is expected to grow in the coming years. However, power supply availability and sustainability are a big challenge for all data center providers across the United Kingdom.
- Moreover, a higher land cost in London (around USD 150 per sq. ft) is expected to shift investments to other European cities with lower land prices. For instance, Amsterdam has a lower land price for building facilities in the FLAP-D data center market, which is USD 38 per sq. ft. The Spanish market has many third-party DC projects under construction, with facilities being developed in Madrid and Barcelona. However, according to Cloudscene, the United Kingdom is said to host 456 data centers as of 2022, making it the most significant in the market studied.
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Tier-3 standards becoming ideal choice among DC construction players
- The tier-3 segment currently has a majority of share in the European region due to the major advantage of its features. These tiers have a high redundancy level and multiple paths for power and cooling. These data centers have an uptime of around 99.982%, translating into a downtime of 1.6 hours per year. The increasing adoption of edge and cloud connectivity is expected to boost the segment's growth.
- The United Kingdom hosts the maximum number of tier 3 data centers in the country, with Slough and Greater London holding a major share. The other major locations are France, Germany, Ireland, and other countries. Dublin is the only region that hosts more than 98% of Ireland's tier 3 data center facilities, with North and South Dublin holding a major share. The tier 3 segment is expected to grow from 7,979.69 MW in 2023 to 12,110.18 MW in 2029, registering a CAGR of 7.20%.
- Furthermore, there are 28 data center facilities under construction which are being built with Tier-3 standards. Major Tier 3 DC construction players include Colt Technology Services Group Limited, Equinix, Inc., NTT Ltd, and Echelon Data Centres. The construction is projected to be more concentrated in the London region, followed by Manchester, Cardiff, Birmingham, and others. Overall, SMBs generally prefer to use at least a Tier 3-rated system for the far superior redundancy protections offered. SMEs account for 99.9% of the business population in the United Kingdom. At the start of 2022, there were estimated to be 5.5 million UK private sector businesses. Such trends are major factors for the major upcoming construction in Tier 3 certification.
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