european data centre market update

European Data Centre Market Update

Gabriel Harris

Senior Director – CBRE Data Centre Solutions

AGENDA

Tier 1 EuropeanData Centre Market Update

Market Trends & Dynamics

1

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


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 .



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.


Frankfurt Data protection

Financial services

Eastern gateway

London Corporate HQs

European powerhouse

Abundant supply

Amsterdam Connectivity

Paris Domestic demand


WHICH FLAP?



Enterprise Factor

Data Protection

IT Infrastructure

/ Cloud

DEMAND DRIVERS


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.


WHAT IS ALL THE HYPE ABOUT?


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


‘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


M&A ACTIVITY

OPERATOR OPERATOR

OPERATOR OPERATOR

INVESTOR OPERATOR

CARRIER OPERATOR

CARRIER MANAGED HOSTING


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



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.”


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’



Source: World Economic Forum


‘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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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.

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