We are witnessing a historic turning point in the German data center real estate market. Total market volume has surpassed the USD 10 billion threshold reaching approximately USD 10.41 billion in 2026. Germany is reinforcing its position as the second-largest digital hub in Europe, with institutional capital flowing primarily into Frankfurt am Mainand Berlin.
Demand for modern hyperscale data center campuses continues to accelerate. Forecasts indicate annual market growth exceeding 14%. An increasing number of institutional investors now view digital infrastructure as a strategic safe-haven asset class. Traditional office assets are being replaced in many portfolios by technology-driven real estate.
Ongoing digitalization, AI deployment, and cloud expansion are sustaining long-term demand for secure, scalable data storage. Each available megawatt of power capacity has become a highly valuable strategic asset. Developers are aggressively seeking new land for large-scale infrastructure investments.
Data is the new oil – and Germany is building Europe’s most advanced refineries.
Hyperscalers Drive Billion-Euro Investments in Frankfurt and Berlin
Transaction volumes in 2026 have reached unprecedented levels. The primary growth driver remains the exponential expansion of artificial intelligence infrastructure. Technology giants such as Microsoft and Amazon are investing billions of euros into German digital infrastructure, particularly in the Frankfurt region.
Individual market participants have committed up to EUR 8.8 billion in single-country allocations. Investors are acquiring both stabilized assets and development projects under construction. The colocation market currently dominates transaction structures, while IT service providers and the financial sector generate the highest power demand.
We clearly observe a shift toward campus-scale facilities exceeding 100 MW of capacity. Demand from public cloud providers significantly exceeds available supply. Many assets are fully pre-let before official construction completion.
Frankfurt remains Europe’s core data node due to DE-CIX – the continent’s most powerful internet exchange. At the same time, Munich and the Mainz region are gaining strategic relevance. The German data center market is maturing rapidly in terms of energy sourcing, connectivity, structured financing, and professional asset management.
At Prime East, we support institutional investors in sourcing, structuring and securing high-performing digital infrastructure assets across Germany and Central Europe.
Yields, Vacancy and Rental Growth in Germany’s Data Center Sector
Return structures within the German data center market continue to evolve. Prime yields for core stabilized assets currently average around 4%. For pension funds and infrastructure vehicles, this represents an attractive risk-return profile.
Vacancy rates have dropped to approximately 6.5%, reaching historic lows. Colocation rental rates are increasing by roughly 10% annually. Long-term lease agreements with global cloud providers provide predictable cash flows extending across decades.
Construction costs per megawatt now exceed USD 11 million, reflecting increased technological and energy-efficiency standards. Despite high CAPEX requirements, overall project profitability remains strong due to:
- high power density
- long-duration lease structures
- upward rental trends
- structural supply constraints in Tier-1 markets
Data centers are often compared to logistics real estate yet their systemic economic relevance is even greater.
Let’s talk about rental growth in Data Center Sector
Energy Efficiency, ESG Regulation and Grid Constraints
Germany’s regulatory framework is reshaping the sector. The national Energy Efficiency Act imposes strict requirements:
- Mandatory use of renewable energy from 2027 onwards
- PUE ratio ≤ 1.2 for new facilities
- Compulsory heat recovery integration
Modern facilities increasingly connect to district heating networks via advanced waste-heat recovery systems. ESG considerations are fully embedded in investment underwriting.
The most significant bottleneck remains grid capacity availability. In some regions, projects face multi-year delays awaiting power connection approvals. As a result, edge data centers are becoming increasingly relevant in regional markets, reducing latency and decentralizing infrastructure loads.
Industrialized modular construction and speed-to-power delivery are emerging as critical competitive differentiators.
Germany is positioned to remain Europe’s leader in green, energy-efficient digital infrastructure development.
Outlook: Digital Infrastructure as a Strategic Core Asset Class
The German data center market stands at the beginning of a long-term infrastructure supercycle. Institutional investors are allocating capital strategically to this sector as digital demand continues to accelerate.
Energy, infrastructure, and connectivity are converging into a unified investment narrative.
Prime East continuously monitors regulatory developments, yield movements, and acquisition opportunities across:
- Hyperscale campuses
- Colocation investments
- Edge facilities
- Brownfield repurposing
- Land sourcing for AI and energy-driven data campuses
Now is the moment to secure strategic positions within Europe’s largest and most dynamic digital infrastructure market.
Sources
- Mordor Intelligence, Germany Data Center Market Size & Share Outlook to 2031.
- CBRE, European Data Centres Outlook 2026: Trends and Vacancy Rates.
- JLL, 2026 Global Data Center Outlook: Infrastructure Investment Supercycle.
- GTAI, Data Center Germany: Investment and Market Analysis.
- AlgorithmWatch, Germany’s Data Center Boom and Power Grid Challenges 2026.
