AI growth to further strain data centre capacity

Data centres underpin the digital world, serving as the fundamental physical infrastructure for AI services. The burgeoning demand driven by the growth of AI, combined with the already escalating digitisation of economies, will place further strain on the data centre industry.

Vacancy rates within European data centres, across both primary and secondary markets, are projected to decline further this year. Having fallen below 10% for the first time in late 2024, the rate is forecast to reach an all time low of 6.5% by the close of 2026. This is due to surging demand, compounded by bottlenecks in the electrical grid, which limits the volume of new capacity that can be brought to market. Construction and overall project lead times are increasing, while short-term requirements from customers are also on the rise.

Despite capacity constraints, the continued decrease in vacancy is occurring amid a period of record-breaking new supply entering the market. This year, we expect over 750MW of data centre capacity to be added across Europe. This volume is equivalent to the entire colocation data centre capacity of France as of 2025 being added in a single year.

The combination of escalating demand, increasing but constrained supply, and grid limitations is expected to fuel continued upwards pressure on pricing and the need for innovative solutions. The industry is likely to see further strategic partnerships as operators strive to secure both power and capacity in a competitive landscape.