CBRE: Data Center Leasing Eases in London

Data center deals slowed in London in the first quarter of 2008, and as a result the total space leased in 2008 is not likely to match the robust growth levels seen in 2007, according to new data from CBRE's Technology Practice Group. CBRE said demand for data center space for financial services companies has slowed.

London has traditionally been a strong market for data center space, with an imbalance between the demand and the space available. As a result, data center developers and service providers have been actively expanding operations in or near the city. While CBRE says that while it expects leasing to pick up, the first quarter was unusually slow.

"This has been the lowest quarter for take-up in London since the emergence of the corporate market in 2004," said Andrew Jay, Head of Technology Practice Group, CB Richard Ellis. "London has been significantly affected by the current financial climate due to the large number of financial services companies in the market. Although Quarter 1 take-up has been low, there are a number of large deals that will come to fruition in 2008 and while we will not see the same levels of take-up as last year (which was a record-breaking year) we do expect levels to exceed those of 2005 and 2006."

At least one major London-area lease in the first quarter involved a financial services firm. In January Digital Realty Trust (DLR) said it has begun construction on a custom data center facility for HSBC (HBC), the global banking company. The new facility will be built as a site in suburban London acquired by Digital Realty in April 2007. HSBC and Digital Realty Trust have signed a long-term lease agreement for the build-to-suit data project, which is expected to be completed in late 2008.

Companies with new facilities or expansion plans in the greater London market include Digital Realty (DLR), Equinix (EQIX), Savvis (SVVS), Telecity Redbus, Rackspace and Telehouse.

You can read the full release from CBRE for additional information, including summaries of several other European markets.