The UK has a long history with hyperscale and this continues to drive expansion activity and the market’s overall growth. AWS first entered the market in 2016 and there are now seven hyperscale cloud platforms up and running in the London area. The UK does not face as many geopolitical challenges as the rest of Europe. It is friendlier terrain for US-based hyperscalers and there is some presence from China-based hyperscalers. Underpinning a favourable landscape is the fact that the UK is a global leader in outsourced and public cloud infrastructure adoption.
The demand for hyperscale cloud was further accelerated by the shift to online life during the peak of the pandemic. And data centre operators benefited handsomely. Absorption of inventory has been steady and consistent, requirements are rising rapidly, pre-leasing rates are high and entire buildings are being contracted. Hyperscale has consumed colocation almost exclusively and the trend towards hyperscale shows no signs of slowing down despite early self-build activity. On a revenue basis, hyperscale currently accounts for 52% of the London market and this is projected to rise to 68% in 2028.
The long-term health of the London market is not in doubt and will continue to be fuelled by hyperscale. But there are challenges to be aware of. Land prices are rising and power is constrained in certain areas. Hyperscalers are also starting to self-build. In many of the world’s leading markets, hyperscale demand is pushing infrastructure outside of major metro cores and into secondary markets. The UK already supports two cloud regions for both Microsoft and Oracle in Newport, Wales while Manchester is also seeing strong growth. But despite these shifts, London will remain a top performer. The London colocation market was worth £1.6b in 2023 and is projected to grow at a 5-year CAGR of 17.5%. The demand profile remains healthy and is increasingly diverse.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in London or find a service provider. The methodology applied continues to be the most robust in the industry. We track supply on a space and power basis, split all the metrics along retail and hyperscale lines, and aggregate inventory in multiple tiers according to build status, absorption rates and maximum capacity levels. Hyperscale cloud nodes and on-ramps are mapped and a complete directory is provided.
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