The UK is running on fumes as data center build-outs can’t keep pace with demand
The country's vacancy rate has dropped sharply, with much of the pipeline early-stage and uncertain
The UK is running on fumes in terms of data center capacity, Savills has warned, with surging demand pushing infrastructure to its limit.
Analysis from the real estate services firm found the national vacancy rate has fallen from 27% in 2016 to just 8% in the first quarter of this year.
Things are even tighter in London, where the figure stands at just 7%, thanks to existing cloud ecosystems, network density, and established availability zones. The city now accounts for 1,637 MW of the UK’s total live capacity of 1,803 MW.
“While activity remains anchored to tier-one locations around London, with Manchester cited secondary, beyond these two cities activity is limited reflecting how difficult it remains to deliver network density, occupier ecosystems and timely access to power," said Rupert Duckworth, associate director, Savills Data Centre Advisory.
"Having said that, we are forecasting growth in the North East given its renewable infrastructure and grid connectivity, and by a planning context that is more receptive to large-scale investment. Even so, this is best understood as a medium-term diversification story rather than an immediate release valve for the broader market.”
The firm said that national capacity is likely to increase in the long-term. However, outside the London area, the cloud market is still fairly shallow, as developers favor building on existing infrastructure networks where connectivity is already established and development risks are lower.
In 2024, 191 MW of IT capacity was delivered in the UK as a whole - a record high - followed by an even greater 231 MW last year.
According to Savills, this increase doesn't appear to be continuing, with just 48 MW delivered in the first quarter of this year. Of the 242 MW currently under construction across the UK, around 66 MW is scheduled to complete between Q2 and Q4.
This, the firm noted, shows just how limited the immediate delivery window is, relative to the headline pipeline.
“National supply is expanding on paper, but much of the pipeline remains early-stage and uncertain," said Duckworth. "Pre-letting has become a core feature of the market, with future capacity increasingly committed well before completion."
Capacity constraints could rise
Looking ahead, Savills said the UK is unlikely to see any fall in data center demand, capital, or strategic relevance; the big question is which projects can deliver capacity in a more constrained, regulated, and execution-sensitive environment.
To a large degree, delivery is now shaped by energy strategy as much as by real estate fundamentals.
"Market conversations suggest that, in some of the most constrained West London locations, developers are now planning for multi-year waits for firm capacity, long enough for operators to start to consider alternative power solutions less as a contingency plan than a strategy; using them to bridge the gap to grid capacity and secure position in the right locations,” said Lydia Brissy, Savills' director of European research.
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