2Q 2020 Data Center Market Overview for North America and Europe

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Data center markets in North America and Europe followed a strong first quarter of 2020 with a stronger second quarter, even in the midst of COVID-19. While the pandemic has certainly created operational challenges for the data center industry, overall markets performed well.

In North America, demand in most markets paled in comparison to Northern Virginia. In Europe, Frankfurt turned in a strong performance to complete three straight periods of solid market growth.

Let’s dive into the market data and trends below.

North American Markets Continue Growth

In 2Q 2020, the top data center markets in North America grew 277.5 megawatts (MW), more than double their quarterly historical average growth (includes commissioned power delivery and pre-leasing). 2Q 2020 brings their combined market size to 4,429 MW. A reinvigorated hyperscale sector contributed to the increase and financial companies were more active as well.

2Q 2020 Top North American Data Center Markets' Growth

North American Absorption Surpasses 1Q Total

In 2Q 2020, the top data center markets in North America brought in 238.6 MW of absorption, which is the metric we use to track demand for data center space. This is up 65.2 MW from 173.4 MW in 1Q 2020. Northern Virginia was responsible for a significant amount of the activity, which we unpack in the section below.

Northern Virginia Growth Rate, Absorption Jump Significantly

Northern Virginia is the largest data center market in the world and again led in growth and absorption in 2Q 2020.

Even when factoring in the size of the market, the growth rate of commissioned power was more than triple the average rate of the previous four quarters (includes pre-leasing).

As notable though is the sheer jump in absorption this quarter compared to previous quarters. In 2Q 2020 alone, the market had more absorption than all of 2019 combined Hawk Insight subscription required. Tap to request access.

2Q 2020 Northern Virginia Commissioned Power Growth

Other Notable North American Markets

While Northern Virginia may have had the headline for the quarter, several other North American markets saw unique activity.

Following a banner quarter for Phoenix absorption in 1Q, the market has the second largest amount of data center capacity planned Hawk Insight subscription required. Tap to request access.. for construction in the US - driven primarily by cloud service providers. It is anticipated that Phoenix will be one of the regions large cloud providers will choose to grow in the future.

In Atlanta, 2Q 2020 brought a 70% increase in planned power Hawk Insight subscription required. Tap to request access., as providers start to shift their focus to accommodate hyperscale user needs.

Finally, activity in Northern New Jersey continued with an even better absorption figure in 2Q Hawk Insight subscription required. Tap to request access..

European Data Center Markets

Combined commissioned power across Frankfurt, London, Amsterdam, Paris, and Dublin (FLAPD) cracked the 2,000 MW barrier during 2Q 2020. The markets combined for a final total of 2,053 MW, up from 1,972 MW in 1Q 2020.

2Q 2020 Top European Data Center Markets' Size

Individual Market Size in Europe as of 2Q 2020

As of 2Q 2020, London remains the largest colocation data center market in Europe with a total commissioned power of 777.6 MW Hawk Insight subscription required. Tap to request access.. Frankfurt and Amsterdam finished the quarter near equal in size for the second and third spots.

2Q 2020 Top European Data Center Market Size

Market Growth in Europe over 2Q 2020

Frankfurt may have matched Amsterdam in terms of total market size this quarter but the growth it took to get there was no small effort. Frankfurt increased their market size by 37.3 MW Hawk Insight subscription required. Tap to request access., 9x more than Amsterdam’s modest 4.1 MW growth Hawk Insight subscription required. Tap to request access..

Now as a qualifier, a major portion of Frankfurt’s growth can be attributed to a 27 MW pre-lease Iron Mountain signed with a major cloud service provider at their FRA-1 facility. While Frankfurt doesn’t often see leases of this size, we’ll be watching the market closely over the next few quarters to see if interest keeps up.

Also of note in Amsterdam, the data center moratorium that was put in place in 2019 was lifted during 2Q 2020. We’ll also be watching the market to see how quickly new capacity comes online and how much new construction gets under way in 3Q.

The Edge in Europe

While Frankfurt, London, Amsterdam, Paris and Dublin are set to continue as major data center hubs, interest is also increasing in smaller tier 2 and tier 3 European markets.

Some data center operators new to Europe are bypassing tier 1 markets and opting to establish their first location in smaller markets where they can quickly generate momentum. Edge sites are also gaining steam, as major data center operators and cloud service providers are looking to deploy 100+ edge sites across Europe.

We anticipate releasing data on smaller European markets towards the end of 2020 or early in 2021. If you’re interested in staying up to date on these markets and want to know when the data goes live, just shoot us a note and we’ll send you a friendly reminder as we get closer to launching.

The Road Ahead for 2020

Northern Virginia is clearly off to a strong start in 2020. If the pace keeps up, they’ll be turning in a banner year.

In North America, watch for the pick up in enterprise user demand after a pause in 2Q 2020, as IT teams turned inward to support their companies through the COVID-19 transition. We hope to see deals in the 100kW-2MW range return to the market, though some have certainly been lost to economic conditions.

The Frankfurt data center market generated significant momentum over the past few quarters and is extremely active in Europe. We believe that will continue through the rest of 2020.

In Amsterdam, the moratorium capping data center development during 2019 and the first half of 2020 has been lifted. It’s anticipated construction could increase here through the rest of the year, which we’ve seen already as Amsterdam’s under construction capacity increased in 2Q Hawk Insight subscription required. Tap to request access..

This article is a free preview of Hawk Insight, a quarterly release of datacenterHawk’s market research product for data center professionals.