Let’s be honest. The internet has gone from something that’s “nice to have” to something that we need to have in our daily lives. We use the internet for school, work, shopping, and even socialising. This is why data centres in Frankfurt (and the rest of Europe) have become a booming business. Learn more about data centres.
Why Frankfurt is ideal for data centres
Frankfurt is the finance and business capital of Germany. The city has also made a place for itself in the data centre world by being the industry’s lead destination for capital deployment.
Frankfurt’s hosting firm mainly has clients in the manufacturing, commerce, banking, and financial industries. The reason for this is that Germany has become an international powerhouse.
The data centre industry plays a crucial role in contributing to the local GDP. According to a Jaymie Scotto & Associates (JSA) article, the city’s utility firms and power grids had spent more than US$900 million to meet the requirements for data centres.
For this and other reasons, Frankfurt’s data centre is booming. Below we go deeper into the different reasons why this city is perfect for data centres.
Plenty of space
Other cities across Europe and even the United Kingdom have had to limit the number of data centres they can build, such as Amsterdam. London has also had to restrict the number of data centres it has because of limited real estate.
Unlike these cities, Frankfurt has fewer obstacles for data centre providers to overcome. The town has plenty of space for these data centres. Data centre providers can also benefit from the city’s regulations and governance.
But this could change if more and more data centres providers decide to move to Frankfurt. In Amsterdam, the city’s power system struggled, which led to the city restricting any new developments.
More data centres built in a city or region means less space will be available in the future. However, there’s a good chance this will be in the far future. Today, Frankfurt is still Europe’s leading data centre destination for data centre providers.
High demand and booming business
Frankfurt has become Germany’s financial and business capital, as we mentioned before. There are plenty of financial services companies based in Frankfurt. These include the German stock exchange, the German central bank, and the European Central Bank.
There are also some international and local German bank offices and branches in Frankfurt. This is why Frankfurt has become one of the critical financial cities in Europe.
With all these financial services based in Frankfurt, it means there is a high demand for data centres providers and their services. Cloud providers and large scale companies look for cities and regions where there is a strong need for their business.
The types of companies that need this type of wide-scale service are the financial and technology industry. As we’ve mentioned before, Frankfurt has a booming financial sector.
Because there are banks in Frankfurt, there is a whole system of technology firms and companies that need data centre services in the region. Data centres in Frankfurt can also assist other businesses based in Europe and even international companies who want to expand.
Data sovereignty and the GDPR
Because many companies are looking to expand in Europe and there are already businesses that are based in cities like Frankfurt, there is a demand for large-scale services such as Software as a Service (SaaS) and Cloud Services.
Plenty of companies will need to upgrade their infrastructure to meet the needs of other companies. These companies are most likely looking to improve their infrastructure in Frankfurt because of the strict data laws in Europe.
Data sovereignty in Europe will ensure that the data stored in these centres won’t cross any borders or be kept in the original country outside of Europe. Simply put, this means that any non-European country that wants to expand in the region will need to build data centres locally to provide services locally. These companies also won’t transfer and store data outside of Europe.
In Germany, the country’s data protection laws require that the organisation only store any German citizens’ information in the country. This law means that there is a higher demand for data centres in the region.
The city of Frankfurt hosts the German Internet Exchange (DE-CIX). The DE-CIX is the most significant carrier and data centre-neutral internet exchange point. In Frankfurt, more than eight terabits per second go through the Internet Exchange.
This is vital for large companies that will need to store different components of a service or application or client information in various data centres. Fast and efficient internet has become necessary for today’s online business and advanced applications.
Which companies are expanding in Germany?
There are plenty of companies that are looking to expand in Europe. The leading companies include the following:
Colt Data Centre Services
China Mobile International (CMI)
Iron Mountain IO
Vantage Data Centres
NIT Global Centres
NDC-GARBE Data Centres
Because Germany has an industrial and manufacturing economy, many data centre construction contractors and sub-contractors assist with Frankfurt’s expansion. Some of these critical companies include:
M+W Group (Exyte)
Various other well-known companies are also looking to expand in Germany. These include the following companies:
Rolls-Royce Power Systems,
Piller Power Systems,
Schneider Electric, Socomec,
One of the recent expansion projects that have made news headlines is CyrusOne’s proposed 90MW expansion in Frankfurt. The earliest step for construction has been planned in Q2 in the year 2023, with the first phase of 9MW of its capacity.
CyrusOne’s managing director for Europe and EVP, Matt Pullen, explained that the company had had some success in Frankfurt.
“CyrusOne has enjoyed remarkable success in the region, and the fifth site in Frankfurt signals our experience in this market and our capability to consistently deliver mission-critical capacity and capabilities that our customers have come to depend on,” Pullen explained.
However, there is some doubt about whether or not Frankfurt will be able to keep up this pattern of growth and expansion. These doubts are amidst the possible new government restrictions placed on the data centre industry.
The Associate Director at VIPA Digital, Tash Mehta, explained that the local restrictions and expensive entry costs could diminish the returns.
“While the mature markets of Frankfurt, London, Amsterdam, Paris and Dublin continue to grow at pace, a high cost of entry and locational constraints such as access to power and network capacity can erode the returns when compared to emerging EMEA locations,” Mehta explained.
Environmental concerns about data centres
Despite the advantages of data centres for local and international businesses, there are still some environmental concerns regarding the industry. Data centres need a lot of space, which will not change.
There is also an increasing demand for cloud computing services from different sectors. This demand also increases the value of the market.
The COVID-19 pandemic also seemed to speed up any online trends before the world went into lockdown. These trends included working from home and e-commerce. These trends have made it even more important to build data centres.
But because more data centres are being built, this means that there is an increase in global electricity use. The International Energy Agency found that data centres are responsible for 1% of international electricity usage.
Data centres also need to remain cool to keep working. When data centres overheat, they can completely shut down, resulting in disastrous results.
Data centres need enormous amounts of water to stay cool to prevent this from happening. This has led to companies such as Google and Amazon coming under scrutiny for using billions of gallons of water in the US.
In conclusion about data centres in Frankfurt
Frankfurt has become the leading destination for data centre providers. It has become a popular destination for data centre providers because the city has a high demand (from the financial and tech industry) for the service.
Frankfurt also does not have some of the restrictions as other cities such as Amsterdam and London. These restrictions include limited space and limiting laws. For all the reasons that we’ve mentioned above, Frankfurt’s data centre industry is expanding.