European Data Centre Market Update
Gabriel Harris
Senior Director – CBRE Data Centre Solutions
AGENDA
Tier 1 EuropeanData Centre Market Update
Market Trends & Dynamics
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2
3
4
5
The BREXIT Effect
The Nordic Data Centre Market Context
Conclusions
3 CBRE DATA CENTRE SOLUTIONS
TIER 1 EUROPEAN MARKET UPDATE‘FLAP’ Market Update
19%
23%43%
15%
European Colocation Supply, Major Markets Q2 2016
Amsterdam
Frankfurt
London
Paris
-
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
2011 2012 2013 2014 2015 2016Q2
European Take-up: Major Markets, Annually
Paris
London
Frankfurt
Amsterdam
Market Supply (MW)
Frankfurt 194
London 371
Amsterdam 164
Paris 129
Total 858
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TIER 1 EUROPEAN MARKET UPDATE
H1 - MARKET HIGHLIGHTS
Take-Up
• Q2 2016 was a record-breaking quarter in the major European markets
• Highest quarterly take-up (35.5MW) - over double the 5-year average for quarterly take-up.
• London also recorded the highest level of take-up for any single market on record with 15.8MW.
• Paris Resurgence – Paris has seen more take-up in the first half of 2016 than it did in the entirety of 2014 and 2015 combined.
• We have reached 55MW of take-up in the major markets. The 5-year average for annual take-up in 62MW and the highest ever recorded take-up (78MW in 2008) is under threat .
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TIER 1 EUROPEAN MARKET UPDATE
H1 - MARKET HIGHLIGHTS
Supply
� Total colocation supply across the four major markets is 858 MW.
� London represents 43% of total supply.
� Significant new facilities in 2016 – Interxion FRA 10, Gyron ‘Campus’ at Hemel Hempstead, Telehouse ‘North 2’ in London.
� 9 facilities changing hands across all four major markets as part of Digital Realty’s acquisition of the Equinix-Telecity divestment portfolio.
Vacancy
� 136MW of available supply across the four major markets. The lowest level in 8 quarters - half of this availability if in London, whilst Paris has the least available space.
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Frankfurt Data protection
Financial services
Eastern gateway
London Corporate HQs
European powerhouse
Abundant supply
Amsterdam Connectivity
Paris Domestic demand
TIER 1 EUROPEAN MARKET UPDATE
WHICH FLAP?
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TIER 1 EUROPEAN MARKET UPDATE
Enterprise Factor
Data Protection
IT Infrastructure
/ Cloud
DEMAND DRIVERS
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North America
2013 643 Exabytes
2018 2.1 Zettabytes
CAGR 26%
Western Europe
2013 311 Exabytes
2018 988 Exabytes
CAGR 26%
Asia Pacific
2013 489 Exabytes
2018 2.3 Zettabytes
CAGR 37%
Cloud Traffic Growth
*Cisco Global Cloud Index: Forecast and Methodology 2013–2018 White Paper
By 2018 the APAC region will see more cloud traffic than any other region, overtaking the US.
The above figures are Cisco’s projections for cloud traffic growth, which are useful to show the emergence of the APAC region but we should be careful
on the overall significance of this change in traffic. We expect data centre traffic to continue year-on-year in the APAC region, but at a steady pace.
The symbiotic relationship between cloud providers and enterprises using the cloud is that they both meet in colo facilities. Enterprises using the cloud will typically want a private connection to the cloud and to have their choice of cloud provider through these carrier neutral data centre facilities.
TIER 1 EUROPEAN MARKET UPDATE
WHAT IS ALL THE HYPE ABOUT?
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A Changing Landscape
Key New Facilities / ExpansionsClustered areas
Waves Of Demand
Cloud service providersTraditional corporates
Increased Commoditisation
Convergence of Retail vs WholesaleIncreasingly standardized offerings
Pricing Consensus
Pricing – consistent or hardeningStrategic pricing
TIER 1 EUROPEAN MARKET UPDATEMARKET TRENDS
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‘The sector is at an all-time high for investment activity and this has driven prices to historically high levels.
Notwithstanding this, high barriers to entry and the capital intensive nature of the business are keeping investors interested.’
- Andrew Jay, Head of Data Centre Solutions, CBRE
TIER 1 EUROPEAN MARKET UPDATE
M&A ACTIVITY
OPERATOR OPERATOR
OPERATOR OPERATOR
INVESTOR OPERATOR
CARRIER OPERATOR
CARRIER MANAGED HOSTING
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Main Concerns
• Period of uncertainty………
• London’s future as a global financial hub?
• Finance and Corporate Sector Moves?
• A change in other occupier location strategies?
• Potential cost impact of new UK regulations?
• Retaining talent - impact for data centre workers without British passport?
• Data Protection Issues?
• It’s just too early to tell.
THE BREXIT EFFECT
TIER 1 EUROPEAN MARKET UPDATE
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Hamina, Finland
Nov 2013, “Google will invest a further €450 million in addition to the €350 million already spent on the Hamina facility in
Finland.”
“The site uses a high tech cooling system, utilising seawater from the Bay of Finland, which reduces energy usage.”
THE NORDIC DATA CENTRE MARKET CONTEXTPUBLIC CLOUD – SELF BUILDS
Lulea, Sweden
“In northern Sweden 60 miles from Arctic Circle – natural cooling will 'chill' computers for eight months per year.”
“The site requires120 MW of energy which is fully derived from hydropower.”
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THE NORDIC DATA CENTRE MARKET CONTEXT
‘Interoute opens new cloud zone in Stockholm’
‘CloudFlare launches new data centers in Oslo and Minneapolis’
‘Tieto signs deal with data centre operator Green Mountain’
‘DigiPlex opens bond-funded data center in Norway’
‘Digiplex’s New Stockholm Data Centre Signs New Carrier Connectivity Deals’
‘EVRY and IBM Join Forces in the Cloud’
‘Telia Sonera will build Finland’s largest shared data centre’
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THE NORDIC DATA CENTRE MARKET CONTEXT
Source: World Economic Forum
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‘Private’ CloudHosting & Managed Services
‘Public’ CloudGlobal IT Infrastructure
Latency/Connectivity
Proximity to Customers
Low Risk Location
Power Cost
Green Energy
Tax
Incentives
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THE NORDIC DATA CENTRE MARKET CONTEXT
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CONSLUSIONS
• Record take up in core European markets.
• Take-up heavily driven by demand from global IT infrastructure companies.
• Growth in cloud computing is a dominant factor driving demand.
• Brexit impact – really too early to tell.
• The Nordic market hasn’t seen a continued uptake in the strong self build activity.
• Market fundamentals are strong and continuing local and international activity.