EU data center market has been overloaded for five years, AI makes crisis visible

"The European data center market has been struggling with a structural capacity shortage for years. The rapid rise of AI is now undeniably exposing this problem. Despite record growth in new data centers, supply continues to lag behind demand. This was stated by market researcher Kevin Restivo of CBRE during Kickstart Europe in Amsterdam on Wednesday. He predicted a fundamental shift in where and how data centers are built in Europe."

"By the end of this year, Europe is heading for approximately ten gigawatts of operational data center capacity. In 2026, supply will grow strongly again. That seems impressive, but according to Restivo, it is still insufficient to meet market demand. For the fifth year in a row, demand for data center space exceeds available supply. This leads to declining availability, rising prices, and ever-decreasing free capacity in existing facilities."

"The rise of AI is also causing a shift in the European data center landscape. Whereas data centers were traditionally built around large internet hubs, attention is now shifting to regions where energy is cheaper and more readily available. Locations in Norway, Iceland, Finland, Spain, and Italy are rapidly gaining significance for new data center developments. The decisive factor is no longer network connectivity, but the price and availability of power."

Europe is nearing roughly ten gigawatts of operational data center capacity by year-end, with stronger supply growth expected in 2026 but still insufficient for market needs. Demand for data center space has exceeded available supply for five consecutive years, producing declining availability, rising prices, and shrinking free capacity in existing facilities. The rapid rise of AI amplifies the existing shortage rather than creating a wholly separate demand stream. AI workloads’ extreme power requirements are shifting new development away from traditional internet hubs toward locations with cheaper, more available energy, such as Norway, Iceland, Finland, Spain, and Italy. Hundreds of megawatts of capacity have been contracted recently for AI applications, with many deals landing in Scandinavia as hyperscalers adapt their European strategies.

Read at Techzine Global