2025

Global Data Center Market Report

Regional Market Overviews

Italy

Italy’s data center market has been growing rapidly as operators look to make inroads into Southern Europe to streamline end-user experience by reducing latency. Alongside Madrid, Milan is emerging as a key hub for data center development in Southern Europe, offering an alternative to the traditional FLAP-D (Frankfurt, London, Amsterdam, Paris and Dublin) hotspots (Datacenters.com, n.d.). Its strategic location, strong network connectivity, and submarine cable links make it an attractive destination for data centers in Italy (Hines, 2022). Demonstrating this growth, European data center operator Data4 is investing €500.0 Mn in a new campus in Vittuone, Milan, which will house four data centers with a total capacity of up to 100.0MW (Data Centre Dynamics, 2024).

In 2024, Italy’s data center market continued its upward trajectory, building on the positive trend of the previous year. New facility openings added 75.0MW of IT power, bringing the total capacity to 513.0MW—an increase of 17.0% compared to 2023. This growth is driven by both existing and new companies expanding capacity through new data centers planned for 2023-2025 (Data Center Observatory, School of Management at Milan Polytechnic, 2024). For example, Microsoft is launching its first cloud region in Italy with three data centers in Lombardy and investing €4.3 Bn to expand AI and cloud capacity in Northern Italy (Microsoft, 2023) (Microsoft, 2024).

GDP (Current Prices) USD (2023)	2,302 Bn
Projected Average GDP Growth (2024-2028)	0.7%
10-year Govt Bond Yield (12-month rolling average)	3.7%
Country Credit Rating	BBB
Renewable Energy Share	28%
Data Center Capacity (Q1 2024)	513MW

Note: Renewable Energy Share excludes hydro-power

Market Dynamics and Growth Factors

Reflecting a broader European shift away from saturated locations, Italy’s data center market is seeing rising demand from investors and operators seeking expansion in less congested areas. Challenges in the traditional FLAP-D markets, such as limited power, constrained land supply, escalating costs, and a need for diversification, have driven growth in Italy. In 2023, 23 organisations, including 8 new entrants, announced plans to build 83 new facilities by 2025, potentially attracting up to €15.0 Bn ($16.1 Bn) in investment (Data Center Observatory, School of Management at Milan Polytechnic, 2024).

Milan, in particular, holds a strategic position for content distribution and reception in Europe, supported by its strong data transfer connectivity and submarine cable infrastructure (Colliers, 2024). The multiple cables and network routes in Milan ensure redundancy, enabling data to be rerouted in case of a path failure. This makes Milan a key gateway for data traffic to and from the continent, making it an ideal hub for data centers and cloud providers. It boasts around 500.0MW of data center capacity (built + under construction), with an additional pipeline of approximately 700.0MW, indicating considerable growth potential. Most of Milan’s data center supply, both operational and planned, has traditionally been concentrated in the city’s southern and western areas, near key internet backbones and the MIX (a major Italian IXP or Internet eXchange Point) (Colliers, 2024). However, data center expansions are shifting north, east, and southwest, signaling a wider distribution across the Milan area. This growth is driven by the demand for more space, improved power availability, and strategic positioning (Data Centre Dynamics, 2024) (STACK INFRASTRUCTURE, 2022).

Nonetheless, the data center market in Milan is not without its challenges. A stable power supply, in the face of escalating energy demand from data centers is a major obstacle. Focus on sustainability has led to increasing pressure on data center operators to adopt greener practices, by integrating renewable energy sources and managing excess heat. This has increased operational complexity and inflated operating costs, prompting investors to explore alternative locations.

Consequently, Rome is emerging as a secondary data center hub, with growth also occurring in Turin (Cloudscene, 2024). Rome hosts key government institutions, international organisations, and large enterprises, driving strong demand for data services. Additionally, Rome’s inclusion in the 5G network rollout across major Italian cities is boosting the need for data computation and storage (GlobeNewswire, 2021). Turin, known for its industrial and tech innovation, has a strong tech ecosystem driven by automotive and aerospace industries, increasing the demand for advanced data solutions (WICCO, 2023). Beyond these major markets, smaller data centers are being built in other regions to cater to specific functional needs (Data Center Observatory, School of Management at Milan Polytechnic, 2024). Smaller data centers bring computing closer to end-users, reducing latency and enabling rapid data processing. They are essential for industries that demand low latency and offer a solution to the challenges of securing land and power for larger facilities (JLL, 2023).

Source: (Cloudscene, 2024)

Italy’s colocation market is expanding rapidly, playing a crucial role in the country’s overall data center growth. The segment grew sharply in 2024, reaching an estimated €765.0 Mn ($818.6 Mn), up from €654.0 Mn ($702.6 Mn) in 2023 and €594.0 Mn ($638.1 Mn) in 2022, reflecting steady year-over-year growth. Within the colocation market, the wholesale segment holds the largest share at 58.0%, followed by the retail segment at 23.0%. While hyperscale accounts for just 19.0%, it is poised for significant expansion, driven by Cloud Providers’ development plans, with projections suggesting the market could more than double by 2026 (Data Center Observatory, School of Management at Milan Polytechnic, 2024) (CBRE, 2024). Hyperscalers require large-scale infrastructure for cloud services, and colocation facilities offer the necessary space, power, and connectivity. Leveraging colocation helps reduce capital and operational costs, enables rapid expansion into new regions, and allows hyperscalers to focus on their core business. Colocation also offers scalability and flexibility, enabling capacity adjustments based on demand, making it ideal for efficient global expansion. The colocation market value could more than double by 2025, potentially reaching up to €1.4 Bn ($1.5 Bn). Conservative estimates place it between €1.0 Bn ($1.1 Bn) and €1.4 Bn ($1.5 Bn) by 2025, implying a CAGR of 24.0% to 46.0% (Data Center Observatory, School of Management at Milan Polytechnic, 2024).

The growth of Italy’s data market is fueled by increasing demand for advanced technologies such as cloud computing, IoT, and edge computing, with the expansion of the public cloud market emerging as a key driver(Data Centre Magazine, 2024). The public cloud market grew notably at a CAGR of 25.0% from 2021 to 2023, reaching $9.5 Bn in 2023. According to Statista, it is expected to continue growing at a CAGR of 17.0% and reach roughly $25.2 Bn by 2029 (Statista, 2024). Major global data center companies like AWS, Oracle, Google, and Microsoft have set up cloud regions in Italy. In May 2024, Oracle partnered with Telecom Italia (TIM) to launch its second cloud region in Turin, housed in TIM’s data center (Data Center Dynamics, 2024). Similarly, Google opened its second cloud region in Turin in 2023, adding to its existing facility in Milan, which was launched in 2022 (Data Center Dynamics, 2023).

Companies with Cloud Regions in Italy

Company	Location of Cloud Region	Year of Opening
Amazon Web Service	Milan	2020
Oracle	Milan	2021
Google	Milan	2022
Microsoft	Milan	2023
Google	Turin	2023
Oracle	Turin	Not Disclosed (Upcoming)

Source: (Data Center Dynamics, 2024)

Policy Regulation

Currently, there are no specific policies or regulations governing data center construction in the country. However, the rapid growth of the sector and the concentration of data centers in specific areas are increasingly subjecting data center operations to social and environmental scrutiny (Italian Datacenter Association, 2024). Data centers are classified as general industrial buildings, resulting in lengthy assessments and delays in acquiring necessary permits. These bureaucratic delays create uncertainty around the timeline for investors to operationalise data centers and recover their investments, potentially hindering the sector’s growth. Therefore, industry experts are advocating for data centers to be classified as “special” assets, allowing for a streamlined application process and faster project approvals (Data Center Observatory, School of Management at Milan Polytechnic, 2024).

Nonetheless, certain overarching policies and regulations, such as the EU’s General Data Protection Regulation (GDPR), continue to shape the data center industry due to their stringent requirements of data protection and privacy. As in other countries, GDPR norms have set off a trend to store data locally in Italy (Data Center Dynamics, 2024) (Intelligent Data Centres, 2024) (Data Center Observatory, School of Management at Milan Polytechnic, 2024). Additionally, Italy has been a key player in Europe for cloud migration and digital transformation, driven by national initiatives like the “Triennial Plan for IT in Public Administration,” which promotes digitalisation in public sectors, and the “National Recovery and Resilience Plan” (PNRR), which focuses on post-pandemic digital growth. The “Cloud Italia Strategy” further supports this by providing guidelines for public administration cloud migration, enhancing the relevance of cloud services and fueling the expansion of the data center market (Data Center Dynamics, 2024) (Intelligent Data Centres, 2024) (Data Center Observatory, School of Management at Milan Polytechnic, 2024).

At the same time, Italy is promoting green certifications like LEED (Leadership in Energy and Environmental Design) and ISO 50001 (Energy Management) to encourage sustainable practices and efficient energy management in data centers. However, these certifications remain voluntary without mandatory policy targets, limiting their overall enforceability and impact on the industry’s environmental standards (Italian Datacenter Association, n.d.).

Outlook

Italy’s data center market is set for rapid growth, drawing both established companies and new entrants looking to build multiple facilities. Due to land and power shortages, as well as regulatory issues in traditional FLAP-D markets, Italy is emerging as an attractive alternative, particularly in Southern Europe. This appeal is further enhanced by the development of new cloud regions and the arrival of subsea cables. The market is expected to see significant capacity growth, increasing from 550.0MW in 2025 to 1,390MW in 2030, representing an annual growth rate of 20.2%. In terms of revenue, the Italian data center market is projected to generate $7.4 Bn in 2025, rising to $9.1 Bn by 2029, with a CAGR of 5.3%. Network infrastructure is anticipated to remain the largest segment, with an estimated market value of $5.3 Bn in 2025 (Statista, 2024) (Mordor Intelligence, n.d.).

Milan is set to capture the bulk of this growth, with international property consultancy JLL projecting a 51.0% rise in data center capacity from 2023 to 2024 (JLL, 2024). As of December 2024, Italy hosted nearly 150 data centers, with Milan as the primary hub, housing 65 facilities. As of March 2024, the city had 14 operational data centers, 8 under construction, and 10 secured for potential development (Statista, 2024)(Colliers, 2024).

The Italian data center market currently favours the development of small (<2.0MW) and medium-sized (2.0-10.0MW) facilities. These data centers are popular due to their cost efficiency, flexibility, and improved latency and data processing, which appeal particularly to local businesses and startups for their lower capital and operational costs. However, in the coming years, as the market matures, larger facilities (>10.0MW) are expected to gain momentum as operators seek greater operational efficiency and economies of scale (Data Center Observatory, School of Management at Milan Polytechnic, 2024).

Despite a promising outlook, the Italian data center market faces challenges, including the need for clearer regulations on sustainability and environmental impact and a more streamlined permitting process for data center projects. The absence of consistent national policies creates uncertainties, potentially delaying approvals and construction. Additionally, competition from other emerging European markets could hinder the growth prospects of the Italian data center industry. However, certain inherent advantages, such as favourable geographical positioning, well-developed digital infrastructure, and a concerted push towards digitalisation, are likely to offset the challenges and sustain growth in the coming years.

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Global Data Center Market Report

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Italy

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