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Prospects for the Data Centre market across Europe appear positive

According to Jones Lang LaSalle’s Autumn 2012 Data Centre Barometer

London,  11th December, 2012 - Jones Lang LaSalle has published its ninth Data Centre Barometer survey which highlights that in spite of the challenging conditions within the European economy, the overall sentiment for the data centre market is positive.

David Willcocks, director of Jones Lang LaSalle’s Data Centre team said: “The overall growth of activity within the wider data centre industry as well as the number of new entrants to the market has grown considerably. Since we began the survey in spring 2009 the response from a cross section of companies managing technical real estate has risen from 9.5 million sq ft to 14.3 million sq ft reflecting this impressive growth. From our own experience and from conversations with others in real estate, greater activity is anticipated in the second half of 2013 and into 2014.”

When it comes to the most optimistic group of respondents, real estate developers and investors remain the most confident. For the third successive survey, this group has expressed improved sentiment in the data industry over the last six months, with levels of optimism trending upwards.

Meanwhile, the Barometer findings show that the proportion of respondents stating that they expect to expand their ‘third party’ managed technical space over the next year stands at almost one-in-three with David Willcocks commenting: “This is the highest level recorded since the survey began and reinforces the confidence shown by operators of colocation space who take up 48 per cent of the data centre industry.”

The survey results also show that the most important driver in the decision making process with regard to the choice of a new data centre remains the availability of power compared to just six months ago when around half of respondents ranked it as their number one factor. This proportion has now risen to nearly two thirds. 

David Willcocks said: “Ever since we started the survey, the issue of power has topped concerns when seeking a new site. Given the nature of the product, this is no great surprise. However over 80% now rank it in their top two concerns. We suspect that this is a concern with availability and lack of power.  This is particularly true in a number of the mature markets where there has been high demand and limited infrastructure upgrades. It is not limited supply but the costs and lead in times that continue to restrict supply in some markets.”

However, the survey showed that a significant proportion of respondents had increased their concern over enlarged consolidation amongst data centre providers potentially leading to a more limited choice for users. Results show that there has been an uplift in the number of those who see such a trend as potentially problematic for competitive reasons with just over half agreeing to some degree with the statement, in contrast to just a third noted in last spring’s survey.

David Willcocks explained: “There appears to be a concern that consolidation will and has started to or will lead to a lack of choice, particularly in the emerging markets. In particular this view was expressed by both corporates and the data centre service side of the industry. Consolidation is the natural consequence, of what is a relatively immature business compared with other sectors, and from conversations and evidence of recent mergers and take overs, this will continue.”

To download a full copy of the report, please click here