AI demand drives data centre boom

A strong pipeline of data centres with planning permission is getting ready to start on site in the next year to support the growth in artificial intelligence (AI).

Glenigan’s construction industry research has identified 434 projects comprising data centres or IT processing facilities at various stages of development in the United Kingdom

The UK data centre market is estimated to be 2.19 thousand MW in 2024 and to grow to 3.61 thousand MW by 2029 according to data from Mordor Intelligence.

The largest scheme in the pipeline is an estimated £8 billion proposal from Amazon Web Services to build a string of data centres across the UK (Project ID: 24262128).

Glenigan’s market intelligence has identified a total of 286 other project in the UK that comprise data centres or IT processing facilities and have planning permission.

Out of that approved total, 53 schemes are due to start on site over the next 12 months according to Glenigan’s research.

Economics director Allan Wilén says: “Developers possess a substantial pipeline of approved projects ready for construction. London boasts a particularly robust development pipeline, followed by the South East.”

Top region

In its 2024 Global Data Center Investor Intentions Survey, CBRE predicted that demand would outstrip supply in Europe, where London is the leading provider of data centres of the four major international cities that comprise what is known in the industry as the FLAP (Frankfurt, London, Amsterdam, Paris).

London also has the biggest pipeline of UK schemes providing data centres and IT processing facilities according to Glenigan’s research, which has identified 96 projects and 66 have detailed planning approval. Seven are due to begin construction over the next year, including Global Switch’s £152.1 million London South development in Tower Hamlets (Project ID: 21230357)

Data centres in the provinces

Outside of London, the South East has the next largest pipeline with plans for 75 data centre-related projects.

Two-thirds of these proposals have planning permission and 10 are expected to start construction over the next year according to Glenigan’s industry analysis.

Plans due on site soon in the South East include Cloud HQ’s £308.3 million data centre on a site west of the Didcot B power station in Sutton Courtenay in Oxfordshire (pictured) (Project ID: 18203036).

Contractors have submitted bids for the main contract with three identified by Glenigan. Once an award has been confirmed, work could begin on site by the end of this year and should run for around two years.

Elsewhere in the South East, Equinix’s plans for the £80.1 million Wexham Road Data Centre Campus in Slough, Berkshire were granted detailed planning permission in August (Project ID: 24074398). A start is due next spring on the site of a former AkzoNobel factory.

Eastern promise

There are also 30 data centre and IT processing schemes in the East of England. Out of this total, five are anticipated to commence construction over the forthcoming 12 months.

Capita Land secured planning permission in July for an £87 million data centre at Mundells in Welwyn Garden City (Project ID: 23255512). Work is expected to begin early next year.

Planned rise

With strong demand from investors, the construction industry looks set to benefit from a rise in data centre and IT processing work.