Data centre construction failing to keep up with demand

That’s according to a new report from a data centre market analysis firm, which has warned of a “marked slowdown” in construction activity in several key markets.

DC Byte said that demand for data capacity rose 30% in 2024, with projects being pre-leased years ahead of delivery and entire projects being sold before construction even begins.

But it warned there was a “structural constraint” on the construction of new facilities, as new construction levels flatten in the US and show signs of strain in European cities like London, Dublin, and Frankfurt.

Among the challenges facing the development of new sites is the availability of power, as local grids struggle to satisfy the demands of energy-hungry data centre facilities. Delays to substation approvals and connection infrastructure have created “multi-year bottlenecks”, according to DC Byte.

Meanwhile, permitting is also a “friction point”, as planning authorities in key markets contend with more complex applications, larger footprints, and more vocal local opposition.

Thos constraints are leading to new markets for data centre hyperscalers opening up, DC Byte said, such as the state of Indiana in the USA, or Alberta in Canada.

Colby Cox, managing director, Americas, at DC Byte, said, “The market is not cooling. It is overcommitted and underdelivered. In the US especially, we’re seeing a real tension between intent and execution.

“Projects are being leased before construction starts, but grid delays and permitting hold-ups are pushing delivery further out. This isn’t a demand problem, it’s a development bottleneck. Operators who can bring capacity online, not just announce it, will be the ones who win.”

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