Identifying the drivers of Data Centre investments in Europe

Data storage service demand is increasing year by year and the smart working approach adopted by several companies during the pandemic has increased significantly the interest of developing efficient solutions worldwide. The usage of third party data centres is growing and only few large corporations are using their own facilities for managing their data (Greenstein, 2020). The demand of data centres is expected to grow in the market for the next years but there are still only few data centres traded in the real estate market (Colliers, 2022) and some European countries are considered among the more interesting locations for the investment pipeline of the main players in the market (Arcadis, 2021).Literature on the location choices for data centres has shown that there are some technical constraints that matters for selecting the location related to the size of the area, the seismic and flood risk, the temperature, the electricity cost, and the quality of ethernet connection. Among the areas that satisfy these minimum requirements it is possible to distinguish the market for urban, suburban and footloose data centre that may target different types of customers with an higher or a lower interest to visit the facilities over time (Greenstein and Fang, 2021). The development of a new building necessary for offering third party data storage service requires huge investments both in term of time necessary for completing the projects (around one year) and economic resources spent (more than € 100 millions for the smaller projects). Empirical evidence on the drivers of the location choices are still limited and mainly focused on the US market;. results provided cannot be generalized for the other international markets.The paper will consider all the third party data centres existing in the EU 28 countries in year 2021 (1,427 buildings) in order to provide an updated map of the location choices in different European areas by distinguishing the urban, the suburban, and the footloose facilities. Data at city level will be supplemented with both census and companies data in order to study the main drivers that increase the interest for developing the data centres. Results show differences among countries and some interesting results related to the comparison of location choice drivers for urban, suburban, and footloose buildings