Data Centre Space Shortage Intensifies Amid AI Demand Surge

Industry experts have raised alarms over the deepening space shortage within European data centres, attributing the crisis to the skyrocketing demand for AI applications colliding with limited expansion opportunities, Reuters news report said.
Vantage Data Centers investmentDuring a conference focused on the sector held in Amsterdam on Tuesday, Kevin Restivo, leading European data centre researcher at CBRE, delivered a grim assessment, stating, “There is no relief in sight.”

Major data centre operators including Amazon, Microsoft, Google, Meta, Oracle, and TikTok owner ByteDance are aggressively expanding their infrastructure to meet escalating demand. However, the availability of suitable space and access to electricity are failing to keep pace with this rapid expansion.

CBRE’s forecasts reveal a concerning trend, with average vacancy rates across Europe’s primary markets – Frankfurt, London, Amsterdam, Paris, and Dublin – expected to plummet to a new low of 8.2 percent in 2024. This follows a previous all-time low of 10.6 percent recorded at the end of 2023.

Despite the positive aspect of rising data centre prices in the European commercial real estate market, Restivo emphasized that “there is less space than ever for the enterprises, for the businesses of Europe.”

While there are plans to expand capacity in secondary markets like Berlin, Milan, Zurich, and Warsaw by over 10 percent this year, vacancy rates in these regions are also on a downward trajectory.

Stijn Grove, director of the Dutch Data Centre Association, dismissed calls for European “sovereignty” in cloud computing and AI as unrealistic. He pointed out that tech giants like Amazon, Microsoft, and Google possess the financial clout to secure scarce power and critical components such as data centre chips manufactured by Nvidia.

Grove highlighted the significant disparity between European cloud operators and their American and Chinese counterparts, noting that European operators lack comparable resources and tools to serve their customers effectively.

Moreover, Grove criticized the lack of a coherent European strategy to address issues such as electrical grid congestion and zoning regulations, citing prevalent “not in my backyard” sentiments.

He concluded by stating, “If you don’t want the data centre, but you want the rest, that’s not realistic.” The remarks underscore the urgent need for coordinated efforts to address the burgeoning challenges facing Europe’s data centre industry amidst the relentless march of AI-driven technological advancements.

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