The mobs of competition lawyers, politicians and impoverished small traders may be screaming at the owners of big datacentres from beyond the muddy fence lines outside Slough, Yvelines or Schiphol-Rijk. Still, the datacentre owners can be comforted by the soft beeps signalling closing bank balances and the murmurs of their tax advisers. If you have a portfolio of hyperscale centres, or even modest co-location centres in Europe, you have done uniquely well this year.

According to Sid Nag, a vice-president of Gartner, a data consultancy, even as total business IT spending has declined because of the pandemic and recession, cloud services, hosted in those featureless, humming buildings, have gained revenues and share. Worldwide, cloud services are forecast to take 14 per cent of the global IT spend next year, up from 9 per cent in 2020. In Europe, the cloud market is projected by Gartner to be €76bn in 2021, an increase of 13.7 per cent over this year.

For years the chit-chat in the datacentre trade has been about how facilities had to be moved closer to “the edge” — nearer end users. And yet the building of datacentres still tends to cluster in what is called Flap, or, sometimes, Flap+D: Frankfurt, London, Amsterdam and Paris, plus Dublin.

The Frankfurt area, for example, takes up 61 per cent of total German data centre space, Paris 69 per cent of France, while Dublin and its surrounding area take 92 per cent of Ireland’s capacity.

The industry’s expansion in Europe has undoubtedly been accelerated by the GDPR rules requiring European personal and critical business data to stay, at least notionally, in Europe.

Since, as I write, there is no EU-UK deal governing data flow, it is not possible to know how much Brexit will affect the UK data industry, the largest in Europe by far.

London and the Slough area will, according to Datacentrepricing, a consultancy, account for 430,000 square meters of datacentre raised floor at the beginning of 2021, or, using the industry’s preferred measure, 638MW. The total for the Flap+D’s was 1,553,000 square meters and 2,251MW. Think of it as a nuclear power station’s worth of electricity being sucked up across Europe.

Whether it’s Brexit or a base effect of past expansion, London is expected to grow by a compound annual rate of only about 7.6 per cent between 2017 and 2025 according to Datacentrepricing. Amsterdam, in the meantime, has overcome local planning objections to datacentres, which are forecast to grow 18.9 per cent compounded over the same period. Ireland is scheduled for an 11 per cent growth, though I believe that is an underestimate.

Of course, this seeming perpetual motion machine attracts property investors. “At the sharpest end, for a ‘powered shell’ [without the customers’ server racks installed] the very best cap rates [ratio of operating income to the property’s net asset value] are in the low 4 per cent area,” says Paul Mortlock, an investment director for data solutions at CBRE. “This is a super sticky industry, where in almost every instance the churn rate is 3 per cent or less. There is a huge amount of procedural stuff for the customer to move, and the broad brush costs to move are around €1.5m per MW.”

While there is a large and rapidly growing number of potential buyers, there are few if any sellers at the project level. If you want to own datacentres, you will find yourself driven to the corporate M&A market and pay at least a 20 times the p/e multiple, not counting political risk, misjudgments about location and customers who go from IG to broke at warp speed.

According to Lydia Brissy of Savills in Paris, the market for datacentres, including the Big Tech hyperscale centres, will probably liquefy initially through sale/leasebacks by the customer/owners. For now, though, in the Flap+D, it is pretty much bid only.