Report: North of England data centre market report (2023) – by CBRE

CBRE has released a market study on the data centre market in the North of England.

The North of England region (consisting of the Northeast, Northwest & Yorkshire & Humberside) is one of the most important parts of the UK economy accounting for over 14 million of the UK’s population and more than 51MW of forecast data centre supply as of the end of 2022.

Although the UK is the largest data centre market in Europe, the vast majority of UK supply has been based around London where the majority of cloud providers and hyperscalers are located.  The decades of data centre development has led to an increasingly constrained London market.

As the London market has grown, there is a shortage of available power, particularly in the western corridor of London, where a large number of data centres are located. This has led to concerns regarding growth of the data centre market. As a result, the cost of suitable land around London has increased and supply is limited.

CBRE finds that the constraint on London provides an opportunity for other regions to increase their market share. Some data centre capacity has migrated to the Southwest of England – with Cardiff becoming a wholesale hub used by cloud providers Microsoft and Oracle among others.

In the North of England, data centres are being used mostly for retail and enterprise services and cloud edge nodes located in the Northwest. Data centres have been established in the cities of Leeds, Liverpool, Manchester & Newcastle serving local colocation requirements for enterprises and the public sector. In Newcastle, Stellium Data Centres has created a campus suitable for wholesale and low-latency connectivity.

About 70% of the colocation data centre supply in the North of England can be found in Newcastle and Manchester. And when compared with the London area, the North of England region has substantial reserves of renewable power available for future use on its doorstep. The Northeast has the lowest carbon intensity of any UK transmission area – a crucial requirement for a cloud service provider or hyperscaler. It is set to benefit from the development of large-scale renewable power from Dogger Bank, the largest off-shore wind farm in Europe.

Selected northern data centres are becoming as strong proposition as a connectivity hub providing access to fibre, dark fibre, Internet Exchanges (IXPs) and subsea cables – offering low latency local, national and international communications – which are comparable with the connectivity levels present in the London area. But they also provide a lower cost base compared with their London counterpart with substantial reserves of available renewable power. The North of England region has the potential to become an alternative location to the power constrained and relatively high-cost London region, where wholesale capacity has traditionally been based.