• Real Estate Trends: Data Centers

    September, 2023

The technology sector experienced a tremendous growth as a result of the Covid-19 crisis and the pandemic. During these unprecedented times, Data Centers became one of the main investments and one of the fastest growing alternative asset classes as companies began to demand large logistic premises to store their data.

Since last year, investment in Data Centers has slowed down as a result of the macroeconomic uncertainty caused by high inflation, sharp rise in interest rates and energy prices. Despite this, investment results in 2022 were higher than to those of the previous year, with investment growing by 83% compared to 66% in 2021. The main investment focus in data centers were the established Tier I markets such as Frankfurt, London, Amsterdam and Paris. However, Tier II areas (less established markets) have experienced strong growth, with the Berlin and Madrid markets standing out.

In the first quarter of 2023, take-up in Spain grew to 66 Megawatts (the metric to measure the size of Data Centers), the strongest first quarter since investment in this type of alternative assets began. Tier I markets have increased their investment by 17% compared to the previous year with an additional growth of 432 MW. Tier II areas (less established markets) have experienced strong growth, with Berlin and Madrid markets standing out.

In Spain, Madrid is the most consolidated market in this investment type, with 20% growth by the end of 2022 compared to 2021 results. Madrid ended the year with an investment of 84MW (+14 y-o-y), an increase of more than 40% compared to Tier I markets. In the first quarter of the year, +35MW of new supply was added, with new construction increasing take-up to 4.5%.

This type of investment is becoming more and more established in the Spanish market and more specifically in the Madrid Community, where more and more companies are setting up Data Centers. It is expected that around €16.3 billion will be invested until 2026, of which, €6.1 billion correspond to direct investment and the remaining €10.2 billion to indirect investment.