2025
Global Data Center Market Report
Regional Market Overviews
Germany
Germany is one of the largest data center markets in Europe, boasting 1,955.0MW of total IT capacity, largely owing to its thriving tech sector, economic importance and centralised location within continental Europe.
Frankfurt dominates Germany’s data center market, hosting close to 75.0% of the country’s IT capacity, largely driven by the data processing demands of its financial district, which is one of the largest in Europe, but also the DE-CIX, Europe’s largest internet exchange (DC Byte, 2024) (Royal HaskoningDHV, 2023).
This has positioned Germany as a key destination for investors, with growing capital inflows into data centers projected to reach $12.2 Bn by 2029. Despite headwinds in the form of increasing land and capex costs and a higher cost of debt following interest rate hikes by central banks globally, German data centers remain an attractive proposition, driven by significant demand for IT capacity, as well as political and regulatory stability (Business Wire, 2024).
GDP (Current Prices) USD (2023) | 4,527 Bn |
Projected Average GDP Growth (2024-2028) | 0.8% |
10-year Govt Bond Yield (12-month rolling average) | 2.3% |
Country Credit Rating | AAA |
Renewable Energy Share | 49% |
Data Center Capacity (Q1 2024) | 1,955 |
Note: Renewable Energy Share excludes hydropower
Market Dynamics and Growth Factors
As of 2024, Germany’s operational data center capacity totalled 1,955.0MW, of which 69.0% pertained to colocation and hyperscale facilities, partly owing to the continued shift away from an enterprise business model as companies continue to favour the cost-efficiency, scalability and optionality of a cloud-based service provision (German Datacenter Association e.V., 2024).
Broader digitalisation trends are also playing a role, and the growth of AI is particularly prominent in Germany. Virtus, a European- focused colocation operator, and Microsoft have both committed over €3.0 Bn to data center investment in Germany, specifically aimed at meeting the increasing data processing, interpretation and storage demands of AI and cloud computing (Data Centre Dynamics, 2024) (FDI Intelligence, 2023)
Germany’s data center market has historically been dominated by Frankfurt, one of the coveted “FLAP-D” markets, given its economic and financial importance to continental Europe, as well as its global connectivity. In particular, Frankfurt is home to Europe’s largest carrier and data center-neutral Internet exchange point, DE-CIX, which in 2023 received 59 exabytes of traffic, equivalent to around 9.8 Bn two-hour video streams, marking an 84.4% increase on the 32 exabytes of traffic received in 2020. With the proliferation of the IoT and the importance of low latency for real-time results and decision- making, it is no surprise that data center providers have strategically located themselves in, or close to, the city (DC Byte, 2024).
Additionally, Frankfurt is a global financial hub, home to 280 financial institutions, including behemoths such as Deutsche Bank and the European Central Bank (Frankfurt Business, 2024). The increasing computing needs of financial institutions are driven by demand for low latency and growing regulatory requirements governing the processing, storage, and transfer of personal data (Digital Core, 2024). Additional factors, such as Germany’s stringent data protection regulations, make it an ideal choice to locate the data storage and processing capacities.
Whilst Frankfurt has historically dominated Germany’s data center landscape, Berlin is rapidly emerging as the country’s second digital hub. Google launched a cloud region in the summer of 2023, and Microsoft now serves its Azure Germany North Europe region from Berlin.
Source: Data Center Association
Note: Frankfurt data center IT power capacity consists of Hyperscale and colocation capacity
Frankfurt and Berlin Key Data Center Facts
| Technology | Frankfurt | Berlin |
|---|---|---|
| IT Load | 745.0MW | 92.0MW |
| Under construction | 542.0MW | 76.0MW |
| IT-Load in planning | 383.0MW | 219.0MW |
In 2019, the city had only a few MW of IT power capacity but is expected to reach the 700.0MW mark by 2027, bolstered by a combination of a digitally proficient economy, the Berlin Commercial Internet Exchange (BCIX) internet node, a substantial wind energy supply from Brandenburg, and competitive land costs (REFIRE, 2024). BCIX’s capacity grew from 3,500Gbps in January 2019 to 4,700Gbps by November 2024, strengthening Berlin’s digital infrastructure. This expansion has enhanced interconnection, faster data transfers, and network efficiency for local data centers (Internet Society, 2024). As of Q2 2024, Berlin boasts the most affordable commercial real estate and land prices among major German cities, making it an appealing investment hub, particularly for data centers (Statista, 2024). Additionally, Brandenburg’s wind energy capacity reached 8.6GW in early 2024, making it the most significant contributor to Berlin’s power needs, thereby positioning the city as a sustainable data center destination (Berlin Business Location Center, 2024).
Hyperscale and colocation providers drive the industry’s capacity growth. The German Data Center Association’s survey report of 2024 estimated that hyperscale data centers corner about three-quarters of the planned capacity. The same survey also points out that the number of colocation data centers, especially those with a capacity of 20.0MW and above, could rise sharply—from 18 presently to about 40-50 by 2030.
Germany’s hyperscale market makes up more than 45.0% of total IT capacity and is dominated by the major global CSPs; AWS, Google, Microsoft, Oracle and IBM, in addition to other global data center operators, such as Alibaba, Apple, Meta and Tencent, each of who have the demand, capabilities and access to capital to construct and/or operate these huge facilities (Ken Research, 2022).
The colocation market is largely dominated by global colocation providers, such as NTT, Digital Realty, Equinix, Cloud HQ, Vantage, Goodman, Stack Infrastructure and Vantage Data Centers, as well as European players, such as Virtus (German Datacenter Association e.V., 2024) (DC Byte, 2024). The colocation providers are tapping into the demand from infrastructure digitalisation in major sectors for efficient data processing.
Policy Regulation
The policy and regulatory directives targeting the data center market in Europe, largely relate to the issue of sustainability, as countries globally continue to work towards Net Zero targets.
The European Commission’s Delegated Act adopted in March 2024, sets out the first phase of establishing an EU-wide scheme to rate data centers based on a series of sustainability factors, which will require data center operators to submit a series of Key Performance Indicators (“KPIs”) bi-annually. The ranking of data centers, as planned under the regulations, will place added pressure on data center operators to improve energy efficiency levels. The norms of performance reporting and ratings have their origin in the EU’s revised Energy Efficiency Directive (European Commission, 2024).
In September 2023, the EU adopted the revised Energy Efficiency Directive (EED), which set a binding target of reducing energy consumption by 11.7% by 2030. The EED mandates reporting performance parameters related to energy and water consumption in data centers with an installed power of over 500.0kW. The data centers will be accordingly rated for their progress towards net zero goals (EUR-Lex, 2023). Among major implications, the regulations will help drive innovations and investments in green data center technologies. Data center cooling technologies, including those based on waste heat recovery, are likely to find traction from operators in both existing and planned units.
Germany’s data center regulations align with EU energy efficiency goals, emphasizing sustainability. The Energy Efficiency Act (EnFG), enacted in 2023, aims for a 26.0% reduction in final energy consumption by 2030 (compared to 2008 levels). It introduces stringent Power Usage Effectiveness (PUE) standards for data centers with a connected load of 300.0kW or more, effective for centers operational from July 2026. Compliance with these norms will require significant investments and may influence operators to prefer cooler, less humid locations to achieve lower PUE values. The long-term impact on capital costs and new data center buildouts remains uncertain (DCD, 2024) (Mayer Brown, 2024) (White & Case LLP, 2023) (White & Case LLP, 2023).
Power Usage Effectiveness Norms for Data Centers
| Mandated PUE to achieve, as of: | 1 July 2026 | 1 July 2027 | 1 July 2030 |
|---|---|---|---|
| Data centers operational on or before July 1, 2026 | ≤ 1.5 | ≤ 1.3 | |
| Data centers operationalised after July 1, 2026 | ≤ 1.2 |
Outlook
The German data center market size, by revenue, is projected to grow at a CAGR of 9.0% during 2024-2030 (Grand View Research, 2024). Colocation and hyperscale units, which already account for about 70.0% of existing capacity (by MW), will drive the growth. The German Data Center Association’s estimates from the project pipeline suggest doubling colocation capacity by 2027 to reach 2.7GW. The top global hyperscale operators have committed investments for a rapid scale-up. As of February 2024, Microsoft announced a €3.2 Bn investment to boost its data center capacity in Germany by 2025 (CIO, 2024). In June 2024, AWS announced its €8.8 Bn investment plan focused on the Frankfurt region during 2024-2026 (AWS, 2024).
The strong market growth outlook, as visible in the investment commitments and an expanding project pipeline, is sustained by a general preference for Germany among the European countries. The country’s central geographical location enables connectivity to all other European markets for data exchange. Its internet exchange, DE-SIX, is the world’s largest and provides premium services through several carrier and data center-neutral internet exchanges. The country’s data protection laws are regarded as the most stringent in Europe and help reinforce the credentials to host capacities involving sensitive AI applications and systems. A robust infrastructure base, especially in terms of reliable power networks and high- speed internet connections, adds to the list of relative advantages. Furthermore, Germany’s rising renewable energy penetration is important for operators seeking sustainability in capacity addition plans (DataCenter Knowledge, 2023).
The growth momentum also entails navigating a few looming challenges. The rising demand for data centers is imposing significant pressure on resources such as land, water, and power. Developers are increasingly challenged by limited land availability and prolonged approval and grid connection timelines. The rise of secondary markets such as Berlin and Munich can be seen as a result of the rising constraints. The stringent regulations in sustainability (notably the legislation on energy efficiency) place additional pressure in terms of capacity design, costs and the like. These are likely to be mitigated through strategic partnerships and collaborations with technology providers and equipment manufacturers. Waste Heat Recovery is among the key efficiency-based technologies that could potentially become widespread with the rise in adoption due to regulatory stipulations. Several innovative projects in Germany are repurposing waste heat from data centers for sustainable applications. For example, Penta Infra has upgraded a high-performance data center in Berlin to utilise waste heat for microalgae cultivation, demonstrating innovative applications of excess thermal energy (ScaleUp Technologies, 2022). Similarly, Virtus is planning to develop a 300.0MW data center campus outside Berlin and make the waste heat generated by the data centers available to the local municipality integrated into its district heating network (DCD, 2023). Another example is the University of Oldenburg, which is using waste heat from its data center to heat faculty buildings and a swimming pool as part of a project, supported by the German Federal Ministry of Education and Research (DCD, 2024).
Overall, Germany is well-positioned to retain its leadership position in the global data center market. The emerging challenges of resource constraints and efficiency regulations are unlikely to dent the market opportunity significantly. However, they may drive developers to consider competing locations in Europe in the long term.