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A server room in a data centre
It should be a textbook growth story: demand for data centre capacity is soaring, driven by artificial intelligence, cloud migration and hyperscaler appetite for long-term leases. Yet Germany, the second-largest European data centre market after the UK, is being held back by a far more prosaic constraint: electricity. Power capacity, not capital, is now the chief determinant of whether new data centre projects can proceed.
Nowhere is this bottleneck clearer than in Frankfurt, Europe’s leading hub for colocation and connectivity. According to JLL’s EMEA Data Centre Report for Q1 2025, only 31 MW of new capacity was added across the FLAP-D markets (Frankfurt, London, Amsterdam, Paris, Dublin) in the quarter – the lowest figure since early 2022. Total annual take-up across the region is forecast to fall from 343 MW in 2024 to just 276 MW in 2025, despite pre-lettings in 2024 reaching a record 702 MW. Martina Williams, Head of Work Dynamics Northern Europe at JLL, sees a demand-supply imbalance hardening: “The high demand for data centres in Europe significantly exceeds supply... we are now recording falling vacancy rates for the fifth quarter in a row.”
Much of that unfulfilled demand is circling Frankfurt, where rents are rising and fringe zones like Hanau, Rosbach and Mainz are being considered to circumvent the capital’s grid limitations. Helge Scheunemann, Head of Research at JLL Germany, identifies the key hurdle: “A lack of electricity availability is making it difficult to find suitable locations, [and] supply bottlenecks are causing delays in development... for some projects, the delay can be up to four years.”
This is pushing Berlin into focus as Germany’s second-largest market, not so much by strength as by default. The Berlin market currently sits at 128 MW of capacity, compared to Frankfurt’s 964 MW, but a further 500 MW is in planning. Waste heat recapture, mandated by Germany’s Energy Efficiency Act, is influencing site selection. Virtus, Colt and Maincubes are driving hyperscale developments in Berlin-Wustermark, Spandau and Marzahn, tapping into Brandenburg’s proximity to renewable energy sources and offshore wind from the Baltic.
Gridlock in Berlin: a secondary market with primary barriers
However, Berlin suffers similar constraints. Roberto Barrios Corpa, Data Centre Lead DACH at JLL, warns: “Everything is very limited within the capital,” with large-scale developments forced out to Nauen and Ludwigsfelde. Even then, grid access remains a gamble. The British think tank Ember reports average connection times of 7 to 10 years in major hubs like Frankfurt and Berlin – in some cases up to 13 years. As a result, it expects Nordic and southern European markets to absorb an increasing share of European data centre capacity through to 2035.
Despite the infrastructure headwinds, institutional investors remain firmly engaged. The listed Aroundtown is converting its former Tricubes office complex in Frankfurt into a 20 MW data centre, with expected rents of €150 per kW per month. The company is also considering a broader pivot toward data infrastructure. “Negotiations with energy suppliers are underway,” said Head of Investor Relations Timothy Wright. “We will only proceed after pre-letting and once power is secured.”
Principal Asset Management has been actively expanding its European data centre portfolio. Its recent acquisition of the Connecta Park in Düsseldorf brings high-grade tenants including Digital Realty, Colt and 1&1 under one roof. Paul Lewis, Managing Director for European Data Centres at Principal, described North Rhine-Westphalia as “experiencing increased demand from hyperscalers.” He emphasised the site’s connectivity to Amsterdam, Berlin and the Nordics, as well as its fibre infrastructure and access to exchange points such as DE-CIX.
Platforms, partnerships and the push for scale
Hauck Aufhäuser Lampe's HAL REIM is aiming to streamline institutional access further. The bank’s newly established platform, HAL Data Centre Development GmbH, covers the full development cycle – from land sourcing and permitting to construction and leasing. It is led by Peter Pohlschröder, formerly of NDC-Garbe and a board member of the German Data Centre Association. HAL REIM launched its special AIF ‘HAL Digitale Infrastruktur Deutschland I’ at the end of 2023 and is now expanding investor access via this development platform. Patrick Brinker, Head of HAL REIM, emphasised the ambition: “The aim is to bring together all stakeholders such as landowners, operators, authorities, electricity and grid operators, financiers and investors as an operating partner. We are closing this gap.”
Meanwhile, MEAG’s strategic partnership with Vantage continues to deepen. David Pecher, Senior Transaction Manager Infrastructure Equity, described in a recent media interview MEAG’s investments in ten Vantage-developed data centres in Germany, the UK and Switzerland as “in the high hundreds of millions of euros.” The portfolios include four sites in Frankfurt, two each in Berlin and Zurich, and two in Cardiff, with a combined capacity of over 250 MW.
Pecher noted that the Singapore sovereign wealth fund GIC was among MEAG’s co-investors. Hyperscaler facilities are typically leased on 15-year terms at around €100/kW, while colocation sites can reach up to €200/kW due to shorter leases and higher risks. MEAG targets IRRs of 10% for stabilised assets, 15% for hyperscaler developments and 20% for colocation builds. “We are investing in a megatrend that is still in its infancy,” said Pecher, noting that Vantage’s facilities already meet the stricter PUE 1.1 energy efficiency benchmarks due to become mandatory in Germany from 2030.
Germany’s data centre pipeline remains robust on paper, with over 1.7 GW under development across Europe’s core and secondary markets. But unless grid access timelines shorten, land values will become increasingly subordinate to power rights. For now, the country’s digital infrastructure race is being run on a very analogue track.