Why location choice is the decisive lever for data center investments
Introduction – Location Makes the Difference
Data centers are far from standard commercial real estate. With massive power demands, extreme requirements for network connectivity, climate control, and uptime reliability, they are complex infrastructure projects. Choosing the wrong site can cost investors millions in opportunity loss, delay market entry, or even cause a project to fail entirely.
On the other hand, a well-chosen location can provide long-term competitive and return advantages. This article examines the central location factors — backed by data, European market trends, and investor perspectives.
1. Technical Requirements
1.1 Power Supply – The Lifeline for Operations and Scaling
Modern hyperscale data centers often require 30 to 100 megawatts of continuous capacity. Resilience is typically built with redundancy designs like N+1 or 2N. According to Ember and DatacenterDynamics, in some established FLAP-D markets (Frankfurt, London, Amsterdam, Paris, Dublin), grid capacity is under pressure, with up to 42% of available electricity already consumed by data centers — in Dublin, nearly 80%. This makes robust, scalable grid connections at new sites critical.
1.2 Fiber Connectivity – The Data Highway of the Future
Reliability and speed are essential. Prime locations offer carrier diversity with multiple network operators and direct links to major internet exchanges such as DE-CIX (Frankfurt) or AMS-IX (Amsterdam). This is vital for supporting growing applications like cloud computing, AI, and edge services.
1.3 Cooling & Climate – Efficiency Meets Resource Management
- Free cooling potential in cooler climates can drastically cut operating costs.
- Water availability is relevant for adiabatic cooling; in water-scarce regions, careful consumption planning is needed — a 100 MW data center can consume up to 2 million liters of water per day.
- Innovations like immersion cooling or waste heat reuse are increasingly becoming standard in modern builds.
2. Land and Building Considerations
2.1 Site Size & Expansion Potential
- Hyperscale projects generally require 5+ hectares of land.
- Colocation and edge facilities can be viable on 3,000 m² of buildable space.
- Expansion potential is a strategic asset — phased, modular developments are becoming the norm.
2.2 Building Architecture
- High floor load capacities for server racks.
- Flexible space allocation between “white space” and technical areas.
- Protection against natural hazards such as flooding or earthquakes — increasingly part of regulatory planning in Europe.
2.3 Security Infrastructure
- Multi-layered access control (perimeter, building, rack).
- Siting away from potential risk infrastructure (e.g., airports, chemical plants) is often a regulatory consideration.
3. Legal and Permitting Environment
3.1 Zoning and Land Use
In many regions, special zoning (e.g., designated “data center” or industrial zones) is required. Early engagement with planning authorities can accelerate approvals.
3.2 Environmental Regulations
- EU-wide energy efficiency requirements (e.g., “Code of Conduct for Data Centres”).
- Emission and water usage limits vary by jurisdiction.
3.3 Grid Connection Approvals
In some countries, obtaining a high-voltage grid connection can take years. Early coordination with transmission and distribution operators is crucial.
4. Sustainability and ESG Priorities
- Many operators have signed the Climate Neutral Data Centre Pact, committing by 2025 to PUE ≤ 1.3 in cool climates, 75% renewable energy, equipment reuse, and waste heat recovery into district heating networks.
- The EU InvestAI Plan allocates €10 billion to initial data center initiatives and $30 billion overall for gigawatt-scale AI facilities, including a planned launch in Munich by September 2025.
5. Market Structure and Competition
5.1 Demand Growth
- CBRE forecasts Europe to deliver a record 937 MW of new capacity in 2025 — 43% more than in 2024. Over half will be in FLAP-D markets, with strong growth in secondary hubs such as Milan and Madrid.
- Cushman & Wakefield reports EMEA’s operational capacity at 10.3 GW, with 2.6 GW under construction and 11.5 GW in planning — a 43% YoY pipeline increase.
5.2 Secondary Markets and Regional Trends
- Spain is emerging as a southern Europe hub: Amazon (€15.7B), Microsoft (€6.7B), Repsol (€4B), and Blackstone (€7.5B) are investing heavily in Aragón.
- CBRE highlights Merlin Properties’ goal of 600 MW capacity by 2029 with sustainable cooling (no water use).
- Iron Mountain is opening a €1.1B, 79 MW multi-client data center campus in Madrid.
6. Case Studies – Successful Locations
6.1 Nordics & Southern Europe vs. FLAP-D
Ember projects demand growth of up to 110% in the Nordics and southern Europe by 2030, compared with 55% in FLAP-D markets, driven by better grid potential and fewer regulatory constraints.
6.2 Project Stargate – Norway as a New AI Hub
OpenAI is building a data center in Narvik (northern Norway) with 100,000 NVIDIA GPUs, starting at 20 MW and scaling to 520 MW. Advantages: cold climate, low-cost energy, liquid cooling, and waste heat reuse.
6.3 Germany – Deutsche Telekom’s AI Gigafactory
Deutsche Telekom is partnering with Nvidia and Brookfield to build an “AI gigafactory” in North Rhine-Westphalia, leveraging industrial infrastructure with secured power and water access.
6.4 Power Plant to Data Center Conversions
In France, Germany, and Italy, utilities are repurposing decommissioned power plants into data centers, using existing grid and water infrastructure for faster permitting.
7. Conclusion and Recommendations
Sites with immediate high-capacity power access, fiber connectivity, climate efficiency, and ESG compliance are not just technical requirements they are strategic advantages. Europe is shifting from the FLAP-D cluster toward more decentralized, sustainable locations. Early movers can benefit from modern infrastructure, regulatory incentives, and technological trends.
Prime East Property Solutions guides clients from market analysis and site due diligence to turnkey delivery — with proven know-how and access to exclusive projects across Europe. Contact us for location-specific market data and project opportunities.
Sources & Further Reading
- CBRE (2025). Europe set to see record data centre capacity roll-out in 2025. Reuters, 13 Feb 2025.
- CBRE (2025). Global Data Center Investor Intentions Survey 2025.
- Cushman & Wakefield (2025). EMEA Data Centre Update – H1 2025.
- Datacenterdynamics.com (2024). Nordics and Southern Europe to see 110% Data Center demand growth by 2030.
- Reuters (2025). Microsoft to invest €6.7B in new data centres in Spain.
- cincodias.elpais.com (2025). Las grandes tecnológicas eligen España como el referente en el sur de Europa en centros de datos.
- tomshardware.com (2025). EU readies $30 billion investment in gigawatt AI data centers.
