Data Centres

January 2026 Forecast

Vacancy forecast to fall to 6.5%

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.

Midyear review

• Absorption of colocation capacity across both primary and secondary markets in Europe has progressed broadly in line with expectations. Similarly, the take-up of capacity currently under construction has continued as anticipated, as virtually no pre-let agreements were withdrawn. While the volume of newly announced schemes across Europe increased significantly in the first half of 2026, these schemes are not projected to materialise within the next two years. The majority of these data centres will be found outside the 15 largest European metro markets. The available power developers need to run facilities that are suitable for hyperscalers and neoclouds are likeliest to be found well outside city boundaries where there are electricity substations that sometimes have capacity to spare.
• In light of these factors, we broadly maintain our view that vacancy will further decline but revised our expectation down to 6% by year-end.

January 2026 Forecast

750MW of additional supply by end of 2026

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.

Midyear review

• We have reduced our European new supply forecast for 2026 by 35MW, or c. 5%. This is due to delayed construction of a select number of data centres by select providers with a limited track record of development. However, we are also expecting some schemes to be delivered faster than expected. Despite labour shortages and supply chain constraints, some projects from operators that have a track record of delivering complex infrastructure are ahead of schedule. This adjustment marks a notable shift in market dynamics, as projects previously scheduled to be ready in late 2026 may be completed in Q3. We interpret the expedited delivery of capacity as a sign of the improved efficiency and resilience of those building data centres.

January 2026 Forecast

Rental rates to increase

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.

Midyear review

• Rental rate growth has materialised broadly in line with expectations, supported by sustained demand, constrained supply, and a lack of power availability. Market evidence from the first half of 2026 confirms continued upward pressure on pricing across both primary and secondary markets.
• Notably, several recent transactions have been concluded at levels exceeding previously anticipated benchmarks, indicating that pricing momentum may be stronger than initially forecast. These agreements underscore the intensity of competition for limited capacity and power, particularly among large hyperscale requirements.
• Against this backdrop, while the original projection for rental uplift remains valid, the emergence of higher-than-expected deal pricing suggests a potential for more accelerated rate growth over the remainder of the year. We therefore continue to expect pricing growth, alongside a growing emphasis on innovative commercial structures and strategic partnerships, as operators seek to secure both capacity and power in an increasingly constrained market environment.

H2 2026 Outlook

Accelerating delivery meets structural demand

The second half of 2026 is expected to see a continued tightening of available capacity, despite the continued expansion of the data centre market and robust demand.

Demand, particularly from hyperscale and AI-driven workloads remains strong, absorbing new capacity at pace and preventing any meaningful easing of vacancy rates.

This dynamic reinforces a market environment where availability remains constrained despite record data centre delivery. The ability of developers to bring forward ready for service (RFS) dates will be critical in alleviating pressure. However, persistent infrastructure bottlenecks, especially around power procurement and grid access, are expected to continue limiting the extent to which supply can fully respond to demand. As a result, the imbalance between supply and demand is likely to remain a defining theme through to year-end, underpinning both low vacancy and upward pricing pressure.

Adapting to a new era of capacity procurement

Operators and occupiers are adopting more flexible and innovative commercial structures, including long-term partnerships, phased deployments, and power-linked pricing mechanisms, to secure capacity in a constrained environment. This shift reflects not only the urgency of demand but also the increasing complexity of delivering data centre infrastructure at scale.

Looking ahead, the combination of tightening vacancy, constrained yet accelerating supply, and strong pricing growth makes it necessary for prospective tenants to pre-let capacity and find new ways to secure power, such as partnerships with energy producers. For both operators and end-users, success in the second half of the year will increasingly depend on the ability to secure capacity ahead of the development curve.

Rental growth is expected to accelerate further in H2 2026, supported by intensifying competition for scarce capacity and power resources. Evidence from the first half of the year indicates that pricing ceilings are being tested, with select transactions exceeding prior benchmarks. This suggests that the market is entering a phase where traditional pricing assumptions may be reset, particularly for large-scale, pre-committed deployments.

Figure 15: Data centre vacancy rate among primary and secondary markets in Europe (%)