Description
The London market – the largest of the four FLAP (Frankfurt, London, Amsterdam, Paris) markets in Europe – continues to go from strength to strength despite land and power shortages in key hubs as well as lengthy permitting processes. Vacancy levels are at an all-time low amidst unprecedented cloud and enterprise demand plus a steady uplift in neocloud/AI takeup.
The government has made good progress in refining planning policy and conditions to be more supportive of data centres as foundational infrastructure that is a key enabler of the UK’s AI ambitions. This comes with a greater emphasis on the need for data centres to contribute not just to national strategy but also the local community, at the same time as being a good environmental citizen.
Starting in January 2026, data centres in England are now able to tap into the Nationally Significant Infrastructure Projects (NSIP) planning regime, whereby applications are determined by the secretary of state instead of going through the local planning authority. The process should simplify planning approvals by consolidating everything into a single package, although it may not actually have any impact on timelines. So far three projects in or near the London market are being considered for NSIP status, all by new developers. Across England, operators are considering applying for some 80 data centre projects.
Reforms to the power allocation process have been underway for some years and new connection requests closed in June 2025. This led to another surge in power requests before the window closed, and regulator Ofgem has proposed new measures specifically for data centres in another attempt to weed out speculative projects. A consultation on fees and project delivery milestones will end in September. The proposed fees are high, which Ofgem says is necessary for the systems to have a material impact but has drawn criticism from industry and other quarters that it will lessen the UK’s competitive advantage.
The July 2026 change in government leadership has raised some questions about future policy regarding data centres and AI. The early signs are that there won’t be any significant changes, but there could be some delays or tweaks to the new planning and power measures at a time when demand has never been higher and operators – and their end-users – need clarity. Overall, we don’t foresee any downturn in London demand. Our 2025 forecast for ~1.35GW of built-out colocation capacity by the end of 2026 hasn’t changed, and we now forecast the market will hit 3GW in 2031.
This report is an excellent resource for any service provider, investor, real estate developer or enterprise end user looking to understand and project the London data centre market, or find a service provider. Structure Research now has DCAI reports for the European FLAP markets plus Milan and Madrid in southern Europe. The methodology applied continues to be the most robust in the industry. The supporting dataset is built from comprehensive asset-level tracking, capacity is measured purely on a power basis, and inventory is aggregated in tiers according to build status, absorption rates and maximum capacity levels.
