4 Minute Read
UK supply to continue its strong growth trajectory into 2026
London’s data centre market will grow rapidly in 2026. Supply growth in the London area* is forecast to be 180MW in 2026 compared with 193MW of new supply in 2025, which itself was a record increase.
Therefore, during 2025 and 2026, combined new supply to be delivered in London is forecast to be 373MW, more than double the amount for the previous two-year period which was 147MW. Even though the 2026 growth in new London supply will be less than in 2025, it will still be the second-highest on record.
The UK will continue to be the largest data centre market in Europe, and the London market the dominant cluster, accounting for over 80% of national supply. By contrast, after Newport and Cardiff (which account for 9%), the next largest UK market cluster, Manchester, accounts for only 2% of UK supply.
New data centres require more power to meet the high-density AI workloads for hyperscalers; with large-scale compute and storage needs. These hyperscalers, typically cloud providers, were responsible for the surge in take-up thus far. Although there was a ‘pause’ in some hyperscaler take-up during the first half of 2025, occupiers have since re-entered the market; a trend we expect to continue into 2026.
We forecast that London’s take-up will continue at high volumes. In 2025, take-up exceeded new supply, and in 2026, take-up will again exceed new supply for the fifth year in succession.
Driving the surge in take-up in part is an emerging source of data centre demand: the neocloud. Neoclouds provide Graphic Processing Unit (GPU) compute services and require massive power, often with liquid cooling for AI workloads.
Despite the UK having the highest commercial electricity costs in Europe, neoclouds are housing workloads in London data centres to allow users to satisfy local data sovereignty concerns and maintain control over their data.
Like other European countries, the adoption of AI by UK enterprises is at an early stage. However, the adoption of AI by hyperscalers and neoclouds is already transforming the UK data centre sector. All large data centre campuses around London are now being planned with AI in mind. In 2026, new developments will need to cater for the higher power densities and the increased floor loadings required.
Figure 6: London new supply 2020 to 2026F
*The London area includes developments to the East (Docklands & Essex), to the North (Oxfordshire & Hertfordshire) and to the West (Slough & Berkshire), and South (Croydon), among others. All these developments around the capital serve cloud AZs and users in the London region.
Trends to watch
-
Data centre delivery
2026 is expected to see the second-highest year on record for new data centre supply, with delivery forecast at 180MW, only slightly below the 2025 record.
-
Strong demand
Take-up is forecast to continue to exceed new supply. During 2026, we expect take-up in London to reach 189MW, making 2026 the fifth consecutive year that take-up will be higher than new supply. This trend reflects the tightness of the London market as new supply is being rapidly absorbed. By the end of 2026, we project that the vacancy rate will be 5.9%, a record low.
-
Neoclouds
Part of the demand increase is due to the rise of the neocloud. Neoclouds enable a user such as a hyperscaler to source compute power quickly. When required urgently, capacity can be rented from a neocloud as a quicker alternative. Neoclouds are renting capacity in the London area to cater for users who wish to be close to the capital.
-
Expanding capacity
Expansion of the boundaries of the London data centre market will continue in 2026. More data centre capacity will be built outside of the established clusters in the Slough and Hayes/Park Royal areas of London where cloud availability zones (AZs) are located, as power is limited. Instead, new data centres are planned in the areas adjacent to AZs, where power availability is greater, including North London, Oxfordshire, Hertfordshire, the London Docklands, and Essex.
-
AI growth zones
The UK Government is promoting the development of large data centres across the UK by introducing a series of AI growth zones. These locations include Culham (Oxfordshire), Teesside, Newcastle, and North and South Wales, with more yet to be announced. The intention is to incentivise data centre development in those areas to support capacity of up to 500MW per AI growth zone.