With the development of artificial intelligence, the global data center market is expected to grow by more than 50% over the next five years, reaching a value of $483 billion by 2029, according to a report by DLA Piper and TMT Finance. In Europe, data center operators are looking for new locations outside the most popular regions, where further development is constrained by limited land availability and challenges with power connections.
The report by the law firm DLA Piper, prepared in collaboration with advisory firm TMT Finance, shows that the global data center market will be worth around $300 billion in 2024 and is projected to grow at an average annual rate of 10% until 2029. This forecast reflects increasing demand for infrastructure supporting AI-based applications, data and process migration to the cloud, the deployment of 5G technology, and other digital transformation activities. According to respondents in the DLA Piper survey, including key global investors in the data center sector, artificial intelligence has become a primary catalyst for market growth, with its computational intensity changing capacity and data center requirements.
“Our clients indicate that more digital data has been created globally in the last three years than ever before in history,” says Michał Pietuszko, Partner and Head of the Real Estate Practice at DLA Piper’s Warsaw office. “Processing and storing such vast amounts of information requires expanding and building new data centers. Consequently, the demand for this type of infrastructure continues to grow, making it one of the most attractive areas for investors worldwide.”
Rapid Industry Growth Boosts Mergers and Acquisitions
The rapid development of the industry has also spurred activity in the mergers and acquisitions market. Between October 2023 and the end of September 2024, 154 data center acquisition deals were completed globally, compared to 101 in the same period the previous year. The average transaction value increased by nearly 50%, reaching $958 million. According to the DLA Piper and TMT Finance survey, 70% of respondents expect data center market activity to increase further over the next two years. Nearly half (49%) anticipate growing interest from funds and financial institutions looking for attractive returns on investments in this expanding market.
In Europe, data center activity in recent years has concentrated in traditional locations known as FLAP-D (Frankfurt, London, Amsterdam, Paris, Dublin). However, interest in other regions is increasing, with attention turning to countries like Italy, Spain, and the Central and Eastern European region. According to DLA Piper experts, Poland has the potential to attract data center investments, which could positively impact the national economy.
“The Polish data center market is still in its early stages of development. As our report shows, in countries like Spain, which is currently attracting significant investor interest, data centers already account for 3% of the national GDP. This opportunity also exists for the Polish market,” says Anna Bodzioch, Senior Associate in the Real Estate Practice at DLA Piper in Poland.
Location and Infrastructure Are Key for Data Center Investments
Location is a critical factor when considering data center investments. Local regulations determine where such infrastructure can be built and influence the feasibility of securing power connections needed for large-scale data centers. Data centers can consume up to 40 times more energy than standard warehouse buildings. Additionally, significant water usage for cooling systems and the heat generated by data centers are important considerations.
According to the DLA Piper report, nearly all respondents (98%) are concerned that power connection issues (such as availability and reliability of infrastructure with adequate capacity) could hinder the industry’s growth.
“The need for further data center development presents challenges for the national market,” says Maciej Rafałowski, Senior Associate in the Real Estate Practice at DLA Piper in Warsaw. “Access to energy in desired locations, its price, the availability of green energy, and network stability are standard challenges when selecting data center locations, including in Poland. Improving the energy situation in the domestic market will also create broader expansion opportunities in the data center sector.”
