Data Centre Double Whammy: London Is Global Lead For New Development, And Almost Last For Vacancies

London is the world’s leading focus for data centre development, with 425 megawatts of capacity under construction. And no wonder investors are flooding in, because, at just 9%, it has one of the lowest vacancy rates in the world.

Second and third spots in the global data centre development league are taken by Washington, D.C./Virginia and the Bay Area, but neither manages to rack up 300MW of new capacity.

So said new analysis from Cushman & Wakefield on the in-vogue asset class.

The drive to optimise cloud-based computing locations is helping London to beat the rest of the market.

The UK is well-placed due to the revenue derived from hyperscale cloud infrastructure, a key metric for cloud-based growth. UK revenue is estimated to be $7.8B, a little less than the $8.9B attributed to the whole of south east Asia, but a long way behind the $64.5B attributed to the U.S.

Of the 55 markets profiled, just 28 now offer all three major cloud services, including London, Chicago, Portland and Dallas. The big new entrant has been Jakarta.

However, pointing in the other direction, Cushman said power capacity issues are pushing new development away from the top tier cities. “This shift has led to rapid increases in market size, particularly in cities across Southeast Asia, South America, and soon, Sub-Saharan Africa," the report said. "We anticipate secondary markets will continue to benefit as certain primary markets restrict power usage and as sustainability demands put pressure on.”

Among those cities ranked as good outside bets are Istanbul, the commercial centre and largest city in Turkey, with more than 15 million people across the greater metropolitan area. Istanbul’s data centre market features only a handful of well-known operators at this point. 

And with more than 12 million people, Moscow is the centre of a massive Russian economy. Bangkok is also tipped. It is a hub for 15 million people and has a strong technical manufacturing sector. Also on the list are Cape Town and Auckland, Athens, Abu Dhabi and Vienna.

Despite London’s lead in new development, and the growth prospects of secondary locations, the major U.S. markets remain the focus of the data centre sector.

Northern Virginia, home to the largest data centre market in the world, finished on top of the overall standings for the third consecutive year. The area will likely become the world’s first two-gigawatt market over the next two years.

Placed just behind are Silicon Valley and Singapore, with Chicago and Atlanta next, and Hong Kong racing up to fifth place.