Economic recovery 'to boost data centre take-up in 2011'

Take up levels in the European data centre market are expected to show a marginal improvement in 2011, a report by CB Richard Ellis (CBRE) has revealed. This projected increase in occupier demand is likely to come from the corporate sector, where IT budgets have been severely restricted since the start of the economic downturn, but are rising now as companies look to take a long term strategic review of their data storage requirements.

Whilst London appears to be ahead of the curve in terms of recovery, the remaining European Tier 1 markets examined (London, Paris, Amsterdam, Frankfurt and Madrid) are expected to see a growth in demand for top tier  facilities, albeit at differing paces. Three wholesale colocation deals completed in the London market have accounted for 40 percent of the European total take up this year, and a lack of supply (currently under five percent) has ensured that vacancy rates are extremely low, standing at 17 percent in the capital.

Of the five core markets studied (London, Paris, Frankfurt, Amsterdam and Madrid), Madrid continued to struggle in the first part of 2011, take up was down again to just 70 metres squared, dramatically lower than that of London and Amsterdam, which saw take up of 3,305 and 5,545 metres squared respectively.

Andrew Jay, Head of Technology Practice Group, CB Richard Ellis said: "There is no doubt that demand for both the wholesale and retail colocation data centre market is returning, despite occupiers and providers remaining cautious in their approach. Several fundraising initiatives in the latter months of 2010 have resulted in a large amount of capital being earmarked for development, a positive sign for the industry. However, this promised space won't be available in 2011, exerting further pressure on the limited supply that exists at present across the region."