Around this time in 2023, Q2 was gearing up to present record demand for data centres across Europe’s leading markets of Frankfurt, London, Amsterdam, Paris and Dublin (FLAP-D), with 114MW of take-up, as specified in JLL’s EMEA Data Centres Q2 2023 report. However, only a few months later in Q4, CBRE’s Europe Data Centre figures acknowledged demand outstripped supply in the five biggest markets. Securing available power and appropriate land are the top challenges data centre providers are faced with when trying to meet the considerable demand from their largest customers in Europe.
Beyond the hyperscale developments, the Edge data centre market is set to achieve a 21.4% CAGR, rising from its 2021 value of US$7.2bn to US$19.1bn by 2026 – a growth of 165% in just six years, according to Onnec. This comes as no surprise given the increasing demand for AI and High-Performance Computing (HPC), which further fuels the already exponential appetite.
Due to this surge coinciding with various constraints such as rising build costs, low availability and pricing debates, operators are looking outside of the traditional hotspot locations. While hyperscalers and colocation providers search for sites to swell their portfolios, data centre operators are increasingly turning to secondary and tertiary markets, emphasised by Cushman & Wakefield in its 2024 Global Data Center Market Comparison.
Research from Soben’s Data Centre Trends 2024 acknowledged ideal locations would have access to land, plentiful renewable energy, cooler climates and a welcoming business environment. Access to established or planned district heating schemes is also a benefit, offering the opportunity to further lower a data centre’s carbon footprint. Iceotope also claimed it is critical the rapid growth of Edge Computing is developed in a manner as sustainable as possible, so the sustainable and community-focused factors make it a promising future for new developments.
“With all of this opportunity, there has also been a conscious effort to reduce impact on the surrounding communities by not only increasing awareness for sustainability but also in efforts to design data centres for a more aesthetic and less disruptive approach,” said Rachel Striz, Senior Project Controls Manager, EMEA, Soben.
There are environmental considerations to be made despite the desires to expand operations, which will continue for as long as the global market is balancing drastic power consumption, increased digital advancements and regional regulations. The primary market saturation is evidently fuelling Edge opportunities but the viability and morality of whether the facilities are needed will be something operators will deliberate over for a while.
We gather perspectives from industry experts – Jeroen Schlosser, Senior VP Operations, nLighten; Mark Lewis, CMO, Pulsant; and Andrew Fray, Head of EMEA Data Centers, Cushman & Wakefield – regarding their outlook on the future of Edge Computing beyond FLAP-D regions.
Jeroen Schlosser, Senior VP Operations, nLighten
An increasingly regionalised pan-European footprint of data centres is very conducive to ensuring the future deployment and scalability of Edge Computing. Clearly, without strategically located, highly connected data centres in situ to provide fit for purpose space and power, Edge Computing cannot fulfil its true potential.
Somewhat comparable to the emergence and rapid growth of the original colocation data centre markets going back 20 years – known as FLAP-D – the arrival of Edge Computing and the perquisite data centres is a function of necessity and demand. In the case of FLAP-D, it was the high cost of fibre networks that made it a total necessity to be as close as possible to the carrier exchanges which had already congregated in those particular cities.
Now, data centre location is being driven by the new requirements of SME and enterprise organisations who want to deploy next generation AI and IoT based Edge applications. Out of necessity to meet this demand, the end-users, data and applications need to be physically much closer together to ensure low latency.
Exactly where to locate is a key consideration. Each data centre must be sited in proximity to population areas which are sufficiently dense with SME and large enterprises to justify their viability from an Edge application demand perspective, while also meeting the all-important low latency requirement. In certain markets it is easier to identify such Edge demand hot spots, for example in Germany, there are distinct business and industry locations such as those for manufacturing and automotive. France and the UK are similar in this respect.
At the same time, the incumbent carriers typically have multiple locations through the country where they interconnect with other (mobile) networks. Often, this strongly influences the Edge data centre location as does the power availability.
Ultimately, the acceleration of fit for purpose, highly connected and scalable regional Edge data centres outside of FLAP-D is vital for delivering and future proofing the Edge Computing concept. Enterprise organisations are assured of a more uniform user experience no matter their physical geographic location.
Furthermore, our customers, many of which are local governments and enterprises, value the ability to have their data centre provider in closer proximity to their people. Not only cutting back on travel, but also by seeing the direct impact of our ability to integrate with regional energy projects – including the direct implementation of heat re-use solutions in their city or region.
Mark Lewis, CMO, Pulsant
Expansion into regions outside of the FLAP-D areas, from a UK perspective, signifies a pivotal shift towards ‘Data Centre 2.0’, propelled by advancements in AI technology and changing data centre architectures. This new phase is moving away from the high-density, large campus data centres characteristic of the FLAP-D cities, towards a more distributed model in which large ‘core’ data centres and smaller, regional Edge data centres coexist – allowing more control over where power is drawn from and why.
These ‘core’ data centres will continue to cater to the needs of hyperscale cloud services and Large Language Models (LLMs) by providing compute at scale, located in areas where multi-MW power and land are available. By contrast, Edge data centres, smaller in scale and typically sub-10MW, are driven by the need for low latency and enhanced connectivity, catering to Internet-of-Things (IoT) applications and AI inference workloads where real-time data processing is crucial.
This distribution not only responds to the growing concerns surrounding data residency, sovereignty and privacy, but also alleviates the pressure on power generation and distribution infrastructures within densely populated cities. The deployment of Edge data centres in regional cities is hugely important to diversifying and distributing the compute power in FLAP-D cities.
Those cities are trying to solve serious logistical challenges; power constraints impacting the electricity supply to local homes has led to restrictions on new data centre construction in Amsterdam and Dublin, for example. There have been similar issues in London’s Docklands and Slough areas, with construction on new homes halted amidst the country’s housing crisis.
The future of Edge Computing infrastructure, therefore, lies in embracing regional diversity, where the expansion of regional data centres across regional capitals and larger cities emerges as a critical strategy. This approach not only circumvents the limitations posed by power and land availability but also enhances application performance, security and customer experience through improved data management and compliance with legislative requirements.
As Europe and the UK moves towards this more nuanced, multi-tiered data centre landscape, the opportunities for investors, governmental policy alignment and IT growth are expected to flourish, marking a significant evolution from the FLAP-D-centric model to a more inclusive and adaptable infrastructure framework.
Andrew Fray, Head of EMEA Data Centers, Cushman & Wakefield
As an elder statesman of the data centre industry, I am frequently asked whether Edge Computing is an attractive investment, since ‘the Edge’ is where carrier neutral data centres started nearly 35 years ago; when London Docklands for Telehouse and then Frankfurt Gallus for Ancotel became key interconnection points for deregulated voice telecommunications.
It’s fair to say that the main drivers for investors to deploy capital and infrastructure into markets outside the traditional FLAP-D have been the major cloud service providers, seeking to establish new availability zones to cover enterprises, consumers and ultimately GDP across EMEA. Such regions are influenced by data protection (especially GDPR) in Europe, as well as the availability of suitable land, cheap and renewable power, and the complex ‘signals’ which the hyperscalers use to determine where to deploy next.
Over the last few years the demand from hyperscale has absorbed in excess of 85% of the available, under construction, or planned data centres in EMEA.
But times are changing, as cloud computing, while growing by low-to-middle double-digits per annum, is being supplemented by the ‘megascale’ requirements for Artificial Intelligence. At the current time, huge sites with massive power capability are being sought across the region in a form of a modern ‘Klondike Gold Rush’, with per site requirements 5-10x what they were 18 months ago.
So where does this leave Edge Computing? The current power land grab for learning AI will be followed by the need to provide data centres for inference AI. These centres are likely to be highly-powered, smaller and, for latency reasons, placed in urban areas adjacent to end users and workloads.
On one one hand, the future looks very bright as Edge includes the data interconnection, peering points, towers and landing stations that it ever did, and with global connectivity strengthening, this means that the Edge will be found in all countries. As I used to prophesise in the distant past ‘every major city needs a carrier neutral data centre’ and I still stand by that. Both B2B and B2C applications need delivery at the Edge to run and thrive.
On the flip side, the case for locally generated IT workloads being processed locally around relatively unattractive (from a data gravity perspective) metro areas is, in my view, still unconvincing. Whilst the disaggregation of data seems inevitable, in the same way that the desktop PC augmented the mainframe computer, I remain uneasy about the data centres currently in scope for this ‘enterprise Edge’, since they are frequently older, legacy, high cost, low efficiency and lower powered sites. The success of these data centres is influenced by many workloads still being migrated to standard public cloud, such as AWS, Google Cloud, Microsoft Azure, Oracle Cloud, Salesforce and others.
I therefore suspect that we will see Edge data centres deployed as part of ‘everything, everywhere all at once’, but not in the way they are currently deployed. To mis-quote Star Trek: ‘There’ll be data centres, Jim, but not as we know it’.
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