2025
Global Data Center Market Report
Regional Market Overviews
United Kingdom
The UK is a key hub for data center infrastructure, ranking second in Europe with 514 data centers as of March 2024, just behind Germany. Globally, it is the third-largest data center market, driven by rapid technological advancements and a surge in cloud computing, heightened data storage requirements, and enhanced processing capabilities (Statista, 2024). As of 2024, the UK’s total data center capacity is estimated at 2.2GW, with London contributing approximately 1.1GW to the market supply (AWS, 2024) (Spain DC, 2025) (Cushman & Wakefield, 2025). Besides the existing installed capacity, London has an additional 265.0MW of capacity under construction and a further planned capacity of 1,260.0MW (Cushman & Wakefield, 2025).
Key geographical hubs within the UK, including London, Manchester, and Slough, serve as vital nodes in the data center ecosystem. Among these, London holds a particularly significant position on account of being a global financial center, benefitting from exceptional connectivity, skilled manpower and a vibrant business ecosystem, making it an attractive location for data center investments (DC Byte, 2023).
GDP (Current Prices) USD (2023) | 3,382 Bn |
Projected Average GDP Growth (2024-2028) | 1.4% |
10-year Govt Bond Yield (12-month rolling average) | 4.2% |
Country Credit Rating | AA |
Renewable Energy Share | 45% |
Data Center Capacity (Q1 2024) | 2,190MW |
Note: Renewable Energy Share excludes hydro-power
Market Dynamics and Growth Factors
The UK has long been favoured for data center investments, attributable to its robust economy, advanced connectivity infrastructure, and strategic geographic location. Investment in the UK data center market has reached unprecedented levels, with numerous operators expanding their footprints to cater to a diverse clientele across the financial services sector, healthcare providers, technology and cloud services providers, media and content providers, retail and e-commerce, and the public sector. The UK accounts for approximately 20.0% of total data center investments within the Western European region. As of October 2024, the UK secured a new investment of £6.3 Bn ($8.2 Bn) from US companies, bringing the total investment in UK data centers to over £25 Bn ($32 Bn) since the current government took office in July 2024 (PR Newswire , 2024) (Department for Science, 2024).
The UK’s data center sector is seeing notable growth, largely fueled by significant investments from colocation data center operators, including prominent entities such as Equinix, VIRTUS Data Centers, Digital Realty, and Ark Data Centers (PR Newswire , 2024) (Data Centre Magazine, 2024) (STT GDC, 2024) (Capacity Media, 2024) (Data Centre Dynamics, 2024). As of March 2023, the colocation market is predominantly characterised by wholesale-focused facilities and operators, which represent 63.0% of the total market. Conversely, retail colocation constitutes the remaining 37.0%. Within the wholesale segment, single-occupier tenants (hyperscalers), comprise 18.0%, while multi- tenant arrangements account for 45.0%. Notably, the retail segment is also witnessing expansion, predominantly driven by new developments occurring in areas beyond London and the M25 corridor1 (Colocation Exchange, 2023).
The UK is more reliant on its capital city than many other countries. London, as one of Europe’s most established data center hubs, holds historical importance in the industry’s growth and development (DC Byte, 2024) (Kao Data, 2024). However, the available capacity in London has diminished significantly in the second half of 2024, with colocation vacancy rates plummeting to 5.7% from 9.0% in the first half of 2024 as providers struggle to meet soaring demand (Cushman & Wakefield, 2024) (Cushman & Wakefield, 2025). Despite rising rents, major technology firms are rapidly securing data center space in London, with take- up capacity reaching 42.0MW in the first quarter of 2024, a marked increase from 17.0MW during the same period in the previous year (CBRE, 2024).
Challenges persist for providers aiming to build new data centers in London, particularly due to lack of suitable land and adequate power supply. This issue is most acute in the western corridor of the city, where land acquisition costs have escalated, complicating project viability. As a result, many data center operators are now shifting their focus to relatively untapped locations beyond London to avoid these constraints (CBRE, 2024) (Kao Data, 2024).
Greater Manchester has emerged as a prominent alternative, with a rapidly growing digital economy. The region offers a strong industrial base, research and development presence, and excellent connectivity. A noteworthy development underscoring the region’s attractiveness for investment is the recent approval obtained by Kao Data in March 2024 for a new 40.0MW data center at Kenwood Point in Stockport. This project represents a £350.0 Mn ($438.2 Mn) investment and is set to be the largest and most advanced facility in North England (Kao Data, 2024) (Kao Data, 2024).
Beyond Greater Manchester, other regions are also being considered by data center operators. Noteworthy developments include:
- In January 2024, Google announced a $1.0 Bn investment to build a data center in Waltham Cross, Hertfordshire (East England), approximately 15.0 miles north of central London (Reuters, 2024).
- Similarly, in May 2024, Ark Data Centers received approval for a new facility near Corsham in Wiltshire (South West England) (Wiltshire Times, 2024) (Data Centre Dynamics, 2024).
- Additionally, a technology hub with three data centers is set to be developed at Thorney Business Park, near Iver (South East England) (Bucks Free Press, 2024).
- Furthermore, DC01UK has proposed a significant project in Hertsmere, Hertfordshire (East England), which is anticipated to be one of the UK’s largest data center campuses. With a reserved power capacity of 400.0MV- amperes from the National Grid, the facility is expected to be operational by 2029. The construction of the data center is estimated to be worth approximately £3.8 Bn ($4.9 Bn) (Yahoo Finance, 2024).
Source: AWS, Cushman & Wakefield, Spain DC
In alignment with Hertsmere Borough Council’s net-zero strategy, the construction of DC01UK will focus on delivering low-carbon buildings and on-site renewable power generation (Yahoo Finance, 2024). This reflects a broader trend within the industry, as operators increasingly prioritise adopting more sustainable practices, including integrating renewable energy sources and implementing energy-efficient technologies. A key development in this regard is repurposing waste heat generated during operational processes. Traditionally focused on cooling technologies for energy efficiency, data centers are now exploring ways to reuse heat, offering the potential for further decarbonisation and supporting residential heating solutions. For instance, in August 2024, North Lincolnshire’s planning committee approved a £3.0 Bn ($3.8 Bn) data center project in South Killingholme, led by Humber Tech Park Ltd. The facility, spanning around three million square feet (278,000 square meters) with 386.0MW of power across three buildings, incorporates green initiatives like a district heating unit to capture waste heat. This heat will be used in a local heating network and a 300,000-square-foot (27,000 square meters) greenhouse for tomato cultivation, contributing to carbon reduction and regional sustainability efforts (MDE, 2024).
The rollout of 5G services in the UK has been a key growth enabler for the data center industry. As of December 2024, around 90.0% to 95.0% of the UK premises can access 5G coverage outdoors from at least one mobile network operator (Ofcom UK, 2024). Although the deployment of standalone 5G networks is still at a nascent stage, the UK government aims for all populated areas to have full standalone 5G coverage by 2030 (House of Commons, the UK, 2024). This surge in connectivity creates a pressing need for faster data processing and reduced latency. The low-latency capabilities of 5G necessitate data centers to adopt edge computing, where data is processed closer to end-users, enhancing real-time applications such as IoT and augmented reality. Consequently, this shift has resulted in the deployment of smaller, strategically located edge data centers, complementing larger facilities.
Policy Regulation
The rapid expansion of the UK’s data center industry has drawn increased scrutiny over its carbon footprint, leading policymakers to enforce stricter regulations on energy consumption and efficiency.
The UK government introduced Climate Change Agreements (CCAs) to promote energy efficiency in energy-intensive industries. Running since 2001, the current phase began on April 1, 2013, and will continue until March 31, 2025. This voluntary scheme offers discounts on the Climate Change Levy, a tax on electricity and fuel, in exchange for energy savings through targeted PUE (Power Usage Effectiveness) reductions. However, penalties apply if targets aren’t met, requiring companies to purchase carbon offsets (techUK, 2023) (Techerati, 2023) (DESNZ, 2023) (techUK, 2023) (techUK, 2023).
In London, the Greater London Authority’s (GLA) London Plan supports these initiatives by mandating that all major new developments, including data centers, achieve a minimum 35% on-site carbon reduction. Even after meeting this target, any residual emission must be offset through a financial contribution to the GLA’s Carbon Offsetting Fund, essentially acting as a tax to finance carbon reduction efforts elsewhere (Data Center Dynamics, 2023) (GLA, 2023). This regulation effectively turns sustainability into a fiscal responsibility.
In the context of these regulatory frameworks and a wider endeavor to promote sustainability and energy efficiency, the UK government has endorsed the initiative to repurpose waste heat generated by data centers by unveiling a funding allocation of £65.0 Mn ($81.4 Mn) for five green heating projects, which are intended to channel waste heat from data centers to residential dwellings (GOV.UK, 2023).
In the UK, commercial property owners must comply with Minimum Energy Efficiency Standards (MEES) to enhance energy efficiency and reduce carbon emissions. A key aspect of MEES is the Energy Performance Certificate (EPC), which rates buildings from A (most efficient) to G (least efficient). Since April 1, 2018, landlords can only grant or renew leases for non- domestic properties with a minimum EPC rating of E, unless exempt. Data centers, like other commercial properties, are subject to these standards, with fines of up to £150,000 ($187,802) per building for non-compliance. Operators may need to adjust operations and infrastructure to meet these requirements. Future EPC reforms propose raising the minimum rating to C by April 2027 and B by 2030 for rental properties (Pinsent Masons, 2023) (Techerati, 2023) (Lexology, 2024).
Alongside regulations focused on energy efficiency and sustainability, post-Brexit, the UK government assimilated the fundamental tenets of the General Data Protection Regulation (GDPR) into its domestic legislative framework, thereby establishing the UK GDPR, which came into force on January 1, 2021. This regulation delineates the essential principles, rights, and obligations pertaining to the processing of personal data within the UK. It is paramount for ensuring data center security, as organizations must adhere to their stipulations to avert significant financial penalties for regulatory infractions. A growing number of enterprises are choosing to retain data within the UK jurisdiction to mitigate compliance risks, driving demand for local data center services, which benefit domestic providers. This amplified necessity for data localization has intensified investor interest in the establishment of new data centers within the nation (Knowsley Council, 2024) (OneTrust, 2024) (Grow, 2024) (Secure Privacy, 2024).
Outlook
The UK data center market was valued at $17.2 Bn in 2024 and is projected to continue expanding at an annual rate of 6.7%, potentially reaching $23.8 Bn by 2029 (Statista, 2024). This growth is largely fueled by the rapid integration of AI technologies across various industries (PR Newswire , 2024). The country has already established itself as a global leader, ranking fourth in the Global Innovation Index 2023 out of 211 countries. Projections suggest that by 2040, an estimated one million businesses throughout the UK will have AI-driven solutions integrated into their operations (PR Newswire , 2024).
Leading technology companies are making substantial investments to leverage this growing momentum. For instance, In November 2023, Microsoft announced a £2.5 Bn ($3.1 Bn) investment over the next three years to expand its next-generation AI data center infrastructure in the UK (GOV.UK, 2023). Meanwhile, AI cloud provider CoreWeave made significant investments of £1.0 Bn ($1.3 Bn) to establish two data centers in the UK in 2024, with plans to invest £750.0 Mn ($939.0 Mn) for further expansion in 2025, aiming to provide high- performance computing solutions tailored for AI enterprises (Data Center Dynamics, 2025).
Recognising the crucial role of data centers in the digital economy, the UK government officially designated them as Critical National Infrastructure (CNI) on 12 September 2024. This designation enables government support in the event of critical incidents, helping to minimize economic disruptions. It also signals strong government backing for data centers, boosting investor confidence and encouraging increased investment in the sector (GOV.UK, 2024) (TechTarget, 2024).
Data center builders, however, are calling on the government to streamline and enhance the planning process, seeking clearer guidance from local authorities, many of whom are not well-versed in the technical aspects of data center construction. Improved guidance would facilitate the development of new sites and support the growing demand for commercial data centers (Sifted, 2023) (Data Centre Dynamics, 2024).
Overall, the UK data center market is poised for continued growth, supported by significant investments and increasing demand for data processing capabilities, especially with the rise of 5G and edge computing. Sustainability will play a critical role, with operators focusing on renewable energy, waste heat repurposing, and compliance with energy efficiency standards such as the UK’s Climate Change Agreements. The focus on carbon reduction regulations, coupled with the growing demand for data localisation post-Brexit, will continue to drive investment and expansion in the UK’s data center sector.