Data Centres

January 2025 Forecast

Near record take-up forecast

Colocation take-up in London is forecast to reach 130MW in 2024, close to the previous record high take-up of 139MW seen in 2022, given continued strong demand from the largest cloud service providers (hyperscalers) and enterprises. We forecast even stronger take-up of 171MW in 2025.

Mid-year review

• 2024 take-up reached 116MW, slightly below forecast. However, take-up in 2025 is now forecast to increase to 183MW, surpassing the record level in 2022, and ahead of our previous forecast of 171MW.
• There are 187MW of new data centre capacity expected to be delivered this year in London, or c. 55MW more than the previous high set in 2022. Approximately 80% of the UK's total data centre stock is in London.
• Almost all of the new data centre space expected in London this year will be accounted for before it is delivered. The vacancy rate in London is expected to decline to under 8% by the end of 2025 due to strong demand and a lack of available stock.

January 2025 Forecast

New supply to be let outside traditional areas

There is more capacity to be let in locations outside of the established data centre markets such as Slough and London Docklands. More organisations are likely to let space in data centres that are further afield as availability in these markets is expected to decline to a new low in 2025.

Mid-year review

• There is limited power availability in all of London including the established markets of Slough – the largest single sub-market in Europe – and in the Docklands market.
• Power supply in Slough will remain constrained as a key substation is set to be upgraded in 2029 at the earliest.
• The Docklands is a market of retail data centres hosting primarily enterprise tenants. Supply remains tight, however data centre operators have plans to enter the East London area with wholesale facilities, including Newham and the Royal Docks, which will boost supply in later years.
• Consistent with our view at the beginning of this year, we expect organisations to let space in data centres outside of established markets in the remainder of 2025.

January 2025 Forecast

Sites outside the M25 become more attractive

Difficulties in securing capital and raising development and operational costs at data centres within the M25 will lead more enterprises and hyperscalers to look for space at facilities further away. An increase in new capacity is being planned outside of the M25 as power constraints force operators into surrounding areas.

Mid-year review

• Operators are planning new data centres around the M25. Data centre investors who are building around the London area are receiving support by the UK Government, which has classified data centres as ‘Critical National Infrastructure’. Data centres are seen as being key to promoting economic growth and enabling AI across the UK.
• As a result, relaxed planning rules are allowing facilities to be built in ‘grey belt’ and some green belt areas surrounding London.
• The Government has overturned planning bans for data centre projects in Hertfordshire and has supported a new data centre development in a green belt site between Slough and Hayes. It is likely that more schemes will be supported to underpin future economic growth.

Take-up to hit a new record

Demand in London to reach a new high in 2025

The London area accounts for c. 80% of all UK data centre stock. Manchester, the third largest cluster, is only 2% of London’s size.

The capital has benefitted from a network effect and an established ecosystem, with all hyperscalers active in the city and surrounding areas.

London, like the rest of the UK, has high power costs when compared with other European countries. But the capital still has advantages including the depth of expertise and ecosystem which make it attractive to data centre investors. Also, data sovereignty concerns mean that commercially sensitive applications used in the UK will continue to be placed locally rather than in Europe.

Hyperscalers are further expanding their presence in their existing facilities and are developing new facilities adjacent to the London cloud region where power is available to accommodate GPU usage and AI workloads.

Take-up in London is set to soar to a record level of 183MW in 2025, a 58% rise compared to 2024 and double the 2021 total. Demand from hyperscalers will again drive much of the need for capacity in the capital, although requirements from AI providers are starting to make their presence felt and will also be dominant.

London providers are trying to keep pace with demand. Despite a record amount of supply expected this year, the London vacancy rate is expected to decline to under 8% by the end of 2025 due to difficulties providers are having meeting demand.

Figure 14: London data centre take-up (MW), 2021-2025F