Generative artificial intelligence-driven workloads are rapidly accelerating data centre demand, which is likely to boost Tier 2 and 3 markets across Europe over the next five years. This complements increases in content generation and migration to the cloud in driving secular demand for localised data centre capacity globally and, in Europe, making data centres an increasingly attractive investment opportunity in our view. 

In their first-quarter earnings reports for 2024, the largest technology companies – including Microsoft, Amazon, and Alphabet – highlighted AI as a primary growth driver, both as a standalone product and as an additional source of demand for cloud services, which have seen double-digit growth rates. Achieving their AI ambitions requires significant investment, which is projected to increase by around 44% year-on-year in 2024 . Data centres are central to this AI push, serving as the critical infrastructure that powers and enables the expansion of AI technologies. 

We have already seen a transformational increase in data centre demand over the last 12 months, with Q1 2024 leasing volumes exceeding 1,800 MW (megawatts) globally – just three years ago average quarterly leasing volumes stood at 200-300 MW. Moreover, forward-looking demand signals are not showing any signs of stabilisation in the near term, as tenants are moving from contracting individual buildings to (in some cases) entire campuses.

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