CB RICHARD ELLIS MARKET VIEW CB RICHARD ELLIS GLOBAL CORPORATE SERVICES European Technical Real Estate European Technical Real Estate FOURTH FOURTH QUARTER QUARTER 24 25 EXECUTIVE OVERVIEW Vacancy rates and availability continue to fall. Demand expected to remain strong, with increasing corporate activity in Frankfurt and Paris. Further increase in supply likely in Outer London. The final quarter of 25 maintained the upward trend in take-up across the European technical real estate market over the past three years. The total European Carrier Neutral Hotel (CNH) stock across the five tier 1 cities increased by 15,91 sq ft over the fourth quarter to 5,51, sq ft. This represents an increase of.29%. Over the year total stock has increased by 16,1 sq ft reflecting an increase of just under 2%. During the fourth quarter there was 2, sq ft of take-up across the five main European data centre hubs, taking the total for 25 to 591, sq ft. Takeup over the quarter was apportioned to 65, sq ft in CNH stock, 5, sq ft in threat stock and 13, sq ft in shell transactions. Of the 2, sq ft of take-up in the fourth quarter, 157, sq ft (78.5%) was in London, 28, sq ft (14.%) in Frankfurt, 6, sq ft (3.%) in Amsterdam, 5, sq ft (2.5%) in Madrid and 4, sq ft (2.%) in Paris. In terms of the source of this take-up 167, sq ft (83.5%) was to corporates, 26, sq ft (13.%) in retail transactions and 7, sq ft (3.5%) to technology companies. The annual picture reflects, out of a total of 591, sq ft, 337, sq ft (57.%) of take-up was to corporates, 11, sq ft (18.6%) in retail transactions, 84, sq ft (14.2%) to systems integrators and 6, sq ft (1.2%) to technology companies. As in the previous year corporate demand has dominated take-up. Of the total 337, sq ft of corporate demand 287, sq ft (85.2%) was in the London market. Looking ahead to 26, we expect demand to continue to grow, dominated by shell and bespoke Fully-fitted corporate transactions in Outer London. This bodes well for the other CNH hubs, particularly Frankfurt and Paris, where a large corporate base should start to drive demand in 26 and beyond. 4TH QUARTER AT A GLANCE Graph 1: VACANCY RATE (%) PER TIER 1 MARKET Total Stock Take-up Availability Vacancy 75 7 65 6 55 5 45 4 35 3 25 21 Q4 22 Q1 22 Q2 22 Q3 22 Q4 23 Q1 23 Q2 25 Q2 25 Q3 25 Q4 Vacancy Rate (%) Amsterdam Frankfurt London Madrid Paris Tier 1 Market www.cbre.com
CB RICHARD ELLIS EUROPEAN TECHNICAL REAL ESTATE FOURTH QUARTER 25 Market Overview CNH Supply The total European Carrier Neutral Hotel (CNH) stock has increased by 15,91 sq ft over the quarter to 5,51, sq ft. This represents an increase of.29%. As at the end of the fourth quarter, there was approximately 3.11 million sq ft of Fully-fitted space, 1.6 million sq ft of Central Services space and 1.348 million sq ft of Shell & Core space across the five European Tier 1 cities. Over the year total stock has increased by 16,1 sq ft, reflecting a growth of just under 2%. This has been driven by the introduction of new facilities to the market over the last 12 months. Market Take-up & Demand The final quarter of 25 maintained the upward trend in take-up across the European technical real estate market over the past three years. During the fourth quarter of 25 there was 2, sq ft of take-up across the five main European data centre hubs, taking the total for 25 to 591, sq ft. Compared to the previous quarter s takeup of 1, sq ft, total market take-up shows a quarteron-quarter increase in take-up of 99.7%. When compared to the 24 total (of 561, sq ft) the 25 figure shows an annual increase in total market take-up of 5.3%. Take-up over the quarter was apportioned to 65, sq ft in CNH stock, 5, sq ft in threat stock and 13, sq ft in shell transactions. This further demonstrates CBRE s view that whilst take-up is being driven by wholesale corporate transactions, the CNH market is underpinning total takeup by on average 6, sq ft of transactions per quarter. Indeed 25, saw a 6.2% growth in CNH take-up from the previous year, with the 25 total reaching 283, sq ft. Graph 2: TOTAL STOCK PER TIER 1 MARKET 7, 6, 5, 4, 3, 2, 1, Total Across Tier 1 (LHS) Frankfurt (RHS) Madrid (RHS) Amsterdam (RHS) London (RHS) Paris (RHS) 22 Q2 22 Q3 22 Q4 23 Q1 23 Q2 25 Q2 25 Q3 25 Q4 Graph 3: SOURCE OF QUARTER FOUR TAKE-UP Technology 3% Systems Integrators % Retail 13% Corporate 84% 3, 2,5 2, 1,5 1, 5 Of the 2, sq ft of take-up in the fourth quarter, 157, sq ft (78.5%) was in London, 28, sq ft (14.%) in Frankfurt, 6, sq ft (3.%) in Amsterdam, 5, sq ft (2.5%) in Madrid and 4, sq ft (2.%) in Paris. In terms of the source of this take-up, 167, sq ft (83.5%) was to corporates, 26, sq ft (13.%) in retail transactions and 7, sq ft (3.5%) to technology companies. The annual picture reflects, out of a total of 591, sq ft, 337, sq ft (57.%) of take-up was to corporates, 11, sq ft (18.6%) in retail transactions, 84, sq ft (14.2%) to systems integrators and 6, sq ft (1.2%) to technology companies. Table 1: TAKE-UP ANALYSIS Take-up (sq ft) Q4 25 Amsterdam 6, Frankfurt 28, London 157, Madrid 5, Paris 4, Total 2, Q3 25 4, 32, 58, 3, 3, 1, Total 25 47, 73, 419, 8, 44, 591,
CB RICHARD ELLIS EUROPEAN TECHNICAL REAL ESTATE FOURTH QUARTER 25 Graph 4: FULLY-FITTED STOCK AVAILABLE PER TIER 1 MARKET 1,4 1,2 1, 8 6 4 2 Total Fully-Fitted Availability Across Tier 1 (LHS) Amsterdam (RHS) Frankfurt (RHS) 45 London (RHS) Madrid (RHS) 4 21 Q4 22 Q2 22 Q2 22 Q3 22 Q4 23 Q1 23 Q2 25 Q2 25 Q3 25 Q4 Graph 5: DISTRIBUTION OF AVAILABILITY BY MARKET SEGMENT Percentage (%) 1% 9% 8% 7% 6% 5% 4% 3% 2% 35 3 25 2 15 1 5 Thus, as in the previous year, corporate demand has dominated take-up. Of the total 337, sq ft of corporate demand 287, sq ft (85.2%) was in the London market. This level of demand is expected to continue in London over the short to medium term. This bodes well for the other CNH hubs, particularly Frankfurt and Paris, where a large corporate base should start to drive demand in 26 and beyond. CNH Availability Over the quarter there was a net decrease in availability of 52,86 sq ft with total availability now standing at 2.11 million sq ft. Total availability has been reduced by 6,1 sq ft in Amsterdam, 36,31 sq ft in Frankfurt, 4,43 sq ft in Madrid, 4,13 sq ft in Paris and 1,97 sq ft in London. These shifts in availability driven by take-up over the quarter have resulted in lower vacancy rates across all tier 1 cities. In London, the vacancy rate has decreased by.59% to 31.98%, whilst in Amsterdam, Frankfurt, Madrid and Paris vacancy rates have decreased to 4.83%, 44.62%, 48.3% and 32.58% respectively. Of particular note is that the Fully-fitted vacancy rate for space in London is 6.14%. Forecast Looking ahead to 26, we expect demand to continue to grow dominated by shell and bespoke Fully-fitted corporate transactions in Outer London. As highlighted earlier, this bodes well for the other CNH hubs, particularly Frankfurt and Paris, where a large corporate base should start to drive demand in 26 and beyond. Based on the current demand pipeline, and factoring in annual growth in take-up seen over the last 24 months, we expect take-up for 26 to exceed 6, sq ft across the 5 major European hubs. 1% % 22 Q3 22 Q4 23 Q1 23 Q2 25 Q2 25 Q3 25 Q4 Shell & Core space Central Services space Fully-fitted space
CB RICHARD ELLIS EUROPEAN TECHNICAL REAL ESTATE FOURTH QUARTER 25 Market Focus London The fourth quarter results for London have again illustrated its dominant position in terms of take-up. In the fourth quarter there was 157, sq ft of take-up (representing 78.5% of total market take-up), an increase on the previous quarter of 171%. Of this take-up 22, sq ft (14.%) was in the CNH market, 5, sq ft (3.2%) of threat stock and 13, sq ft (82.8%) in the shell market. In terms of annual performance, London saw 419, sq ft of take-up in 25 which represents 7.9% of total European market take-up for the year. This represents an annual increase in take-up in London of 5.5%, from the 24 total of 397, sq ft. With the vacancy rate of Fully-fitted space in London currently at 6.14% and demand for high specification, modular, bespoke solutions we expect that take-up will continue to be strong in 26 and beyond. We expect supply of space to increase in the short to medium term, as developers and specialist investors move to satisfy some current requirements in this short-supplied market by starting specialist new-build projects. Indeed, we expect some new high specification space to enter the market in the first two quarters of 26. Graph 6: BREAKDOWN OF QUARTERLY TAKE-UP ACROSS TIER 1 MARKETS Thousands (Sq Ft) Corporate Retail Systems Integrator Technology Undisclosed 3 25 2 15 1 5 23 Q1 23 Q2 25 Q2 25 Q3 25 Q4 Evidence of this has been the introduction to our statistics of a new CNH facility to the west of London. This has seen 3, sq ft of stock added into the figures as provisioned shell and core space. This space will be built out to suit customer requirements, and construction has started on some of this space to house customers overspilling from the operator s original facilities. We expect to see much of this type of expansion over the next 12 to 24 months. Frankfurt Over the quarter the Frankfurt market saw 28, sq ft of transactions, following on from the positive results of the third quarter of 32, sq ft, This means that of a total annual take-up figure of 73, sq ft, 6, sq ft (82.2%) was completed in the second half of the year. Of this total annual take-up, 48, sq ft (65.8%) was in the corporate sector. The 25 total market take-up in Frankfurt was down on the previous year by 11, sq ft (13.1%), yet corporate take-up rose by 15, sq ft (45.5%).
CB RICHARD ELLIS EUROPEAN TECHNICAL REAL ESTATE FOURTH QUARTER 25 This illustrates CBRE s view that corporate demand, as evidenced in the London market, should begin to be replicated in Frankfurt due to its large financial services platform. As the German economy begins to improve, so we see this demand continuing to grow, which bodes well for the Frankfurt market throughout 26 and beyond. It is worth noting that since the introduction to our statistics last quarter of a new facility in Frankfurt the operator has ceased to actively market an existing facility on the outskirts of Frankfurt. As such we have removed the building from the CNH stock figures and have included it in the threat stock figures. Amsterdam Over the quarter there were 6, sq ft of retail transactions. This has resulted in a marginal decrease in the vacancy rate of.99% to 4.83%. Annually, take-up rose from 13, sq ft in 24 to 47, sq ft, a 262% increase. Excluding a single 33, sq ft letting to a technology company, take-up rose to 14, sq ft, a modest 7.7% rise on the previous year. This further illustrates CBRE s view that the Amsterdam market will continue to exhibit high volatility in terms of take-up as local demand is coupled with infrequent large corporate requirements from both local and mainly USbased corporates. Madrid The smallest of the Tier 1 markets in terms of size and operator competition, Madrid has seen 5, sq ft of take-up in the fourth quarter. Thus the total take-up figure for 25 is 8, sq ft, all of which came in retail transactions in the CNH market. In 24 Madrid saw 28, sq ft of take-up, so the 25 result represents an annual decline of 2, sq ft (71.4%). Paris Quarterly take-up in Paris was 4, sq ft in a series of retail transactions in the CNH market. This was a disappointing end to the year for Paris, although one large systems integrator transaction expected to complete in 25, did roll over into January of this year. Despite this, total market take-up in Paris for 25 was 44, sq ft, an annual increase of 11.3%. The Paris market has seen an increased number of corporate enquiries over the past twelve to eighteen months and, as such, in the short term we expect supply of Fully-fitted stock to increase as operators move to convert Central Services and Shell & Core space to satisfy the increasing demand from corporates and systems integrators. The total market vacancy rate in Paris now stands at 32.58%, which is second only to London (31.98%), with Fully-fitted stock in Paris having a vacancy rate of 26.34%. This compares very favourably with the Fullyfitted vacancy rate in Frankfurt (35.28%) and with the potential growth in both locations of corporate demand in 26, there is becoming evident a lack of quality wholesale space on the Paris market. In particular, whilst demand has continued to grow over the past year this has been channelled to existing facilities. This space has now become increasingly saturated and operators are moving to convert Shell & Core space to Fully-fitted. As in London, demand from clients is for high specification, high power density, bespoke solutions which cannot be satisfied in current facilities or requires large amounts of contiguous space which is currently not available. Vacancy in Madrid currently stands at 48.3%, a decrease of 2.23% during 25. In the short to medium term we do not expect any major movements in take-up until the business community becomes more comfortable with outsourcing.
CB RICHARD ELLIS EUROPEAN TECHNICAL REAL ESTATE FOURTH QUARTER 25 DEFINITIONS Carrier Neutral Hotel Stock: Data centres where the operator allows any carrier to connect into the facility and to connect to third parties within the facility, not discriminating between different carriers and charging only nominal fees for interconnection. Threat Stock: In contrast to CNH stock, threat stock data centres are owned or operated by Carriers or hosting organisations which seek to provide bandwidth as part of any service offering and may not be strictly carrier-neutral. Shell Stock: Typically land for development or modern empty warehouse which is acquired for conversion to a data centre for use by an end-user who will use the space for their own purposes, i.e. a corporate. Shell & Core: Shell and Core space is the base real estate of a data centre, a wind and watertight structure with exposed floor and ceiling slabs and exposed finishes to the walls. The landlord would obtain permissions for data-centre use and make provisions for tenants to install their own chillers and back-up power generating equipment. In addition, an incoming diverse raw HV (high voltage) power supply would usually be provided. Central Services: Central Services space comprises Shell & Core plus the main services of diverse chilled-water pipes and a diverse low-voltage generator-backed power supply which are provided by the landlord into the space so that the tenant can install their own dedicated air-conditioning units, power-distribution units, fire suppression, and raised-floor systems. Fully-fitted: Fully-fitted space is ready for tenant IT equipment to be installed almost immediately or subject only to minor works being carried out to account for bespoke equipment and layouts. Retail Transaction: Individual letting smaller than 2, sq ft. Wholesale Transaction: Individual letting greater than 2, sq ft. DATA SOURCE Accurately capturing the dynamics of all the categories of the Technical Real Estate market is very difficult, especially when attempting to analyse vacancy within stand-alone Carrier, Web- Hosting and IT outsource data-centre facilities. The Carrier Neutral Hotel market caters for the full range of user/operator requirements and so is best indicator of the underlying conditions in the Technical Real Estate market. has monitored worldwide Carrier Neutral Hotel supply statistics since 1999. This bulletin relates only to the European Carrier Neutral Hotel Tier 1 markets. In addition, we produce a US bulletin and more detailed Tier 1 market statistics are available on request. TECHNOLOGY PRACTICE GROUP formed a Technology Practice Group (TPG) in 1994 to address the specialised technical real estate needs of high-tech firms such as telecommunications companies, data centre operators and corporates across the world. Core technical real estate services provided by the TPG include: Disposal One-off assignments, Multi-site marketing campaigns. Acquisition One-off assignments, Worldwide network rollouts. Consultancy Consolidation strategies, Mergers & Acquisitions. Asset Valuation Bank, Corporate. Project Management, Development Monitoring, Due Diligence, Building and M&E surveys. Research Market reports, Statistics, Take-up forecasting. For additional information please contact: Andrew Jay andrew.jay@cbre.com Tel. +44 27 182 3461 Stephen Taylor stephen.taylor@cbre.com Tel. +44 27 182 3524 DISCLAIMER 26 Information herein has been obtained from sources believed reliable. While we do not doubt its accuracy, we have not verified it and make no guarantee, warranty or representation about it. It is your responsibility to independently confirm its accuracy and completeness. Any projections, opinions, assumptions or estimates used are for example only and do not represent the current or future performance of the market. This information is designed exclusively for use by clients, and cannot be reproduced without prior written permission of. 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