• European Data Centers’ Outlook

    June, 2024

Data centers are becoming increasingly attractive in the real estate sector. Investor appetite for this type of asset is strong and continues to grow, driven by the global digital transformation and sustained demand for technology infrastructure. According to specialised industry brokers, by FY27 data centers will have increased their capacity in Europe in a c.21% and c.90 new centers will be delivered.

The continued increase in data generation and usage, driven by emerging technologies, has led to sustained demand for storage and processing infrastructure. Along with rising energy and construction costs, since FY22 data center rents have experienced important average increases of 36% for four kilowatt contracts, 47% for ten kilowatt contracts and 51% for 100 kilowatt contracts. This upward trend is expected to continue with annual rent increases of between 5% and 8% for the next few years.

As the market evolves, data centers are expanding geographically, with a focus on sustainability and security. Medium-sized cities lead the benchmark. In many European countries, regional cities rank higher than their respective capital cities in terms of attractiveness for data center development. In Spain, Valencia is the highest ranked city, followed closely by Barcelona and Madrid.

For investors, these assets represent an attractive opportunity to earn stable and predictable income and participate in the continued growth of the digital economy. They also represent an opportunity to diversify their real estate portfolios.