 Welcome to JSATV Europe together with the greener data movement for this quarter's live event focused on European digital infrastructure sustainability I'm John Marchleeman joining me today is Keith Breed senior research analyst at CBRE and Keith It's a pleasure to see you. I don't think we've really we haven't met since before Covid So it's been quite a few years since we saw we've spoken a lot, but we haven't That's right. I mean we I think you came once to the tech capital thing of the CBRE didn't you? Yeah, I see it. Yeah. Yeah, but I'm just a new drawn into CBRE. I've been here less than a year now, so it's It's quite an interesting experience going back to a big company again from where I was before Well, at least you've got very nice offices to get back to Those are probably the most modern post-covid offices in London at the moment Yeah, well, it's location in the West End, so I can't complain. No, yeah Well, it's literally like 20 steps away from Bond Street station as well. So you have your own private interest at the station, but We she's useful when there's no strikes, but a kid Kid let's let's talk about data centers because that's the hot topic that everyone's talking about even in and outside of the industry Everyone wants to know about data centers Let's talk through because you have quite a wide-ranging view of what's happening on the continent Talk us through the latest data center development, especially on the investment But with a sustainable focus to it how important sustainability across everything that you're looking at Well, it's a remarkable topic. I mean that the thing is at the moment There are two things happening. First of all, we're getting huge amounts of data center investment still coming into the market Even though there has been aspects of supply chain issues inflation All these things have been affecting the whole industry in IT and elsewhere There's still huge investment being made in the hyperscale Capacity looking at the traditional flat markets as well still growth going on there particularly in the UK and in Paris and in Basically around London, but going further outside London towards the south-west and towards other parts of of the southeast region And then you're also getting Capacity increases into new regions. You're talking about likes of Lisbon, you're talking about the likes of Madrid and Milan Also talking about the likes of Athens and other areas where Microsoft, Google and other hyperscale companies are putting in their cloud regions And that's stimulating demand for data centers as well So there's a huge amount of growth going on in the circle tier two even tier three markets which is starting to appear and Sustainability you're dead, right? It's a big issue most users now one of the big requirements now is having renewable power at all times for all data centers So this is a requirement coming from the occupiers and users Enterprises and everybody they want to comply with these new regulations And sustainability and renewable power is one big aspect of that And what's happening is the EU is now going to start introducing legislation over the next year or so They've already got the I think it's the EU corporate Sustainability reporting directive coming in which is going to come in beginning of next year to be applied It's now something we've got to prepare for because basically all the companies who use Above a certain size have to report on their sustainability Efforts and how much they're investing and directors are mandated to actually make a statement in their annual report Which is going to be quite a big change and that's not something So again, there's gonna be much more focus on it because it's been put up at a very senior management level It's just the mission that because when we say quite a few companies There's actually any company that deals in today's in space will have to abide by that new regulation because I think it's companies from 250,000 euros We'll be virtually everybody will have to comply and it's going to cause a lot of problems for some companies particularly those who have their own Inbuilt I don't know enterprise service or whatever because that's going to be an issue for them Yeah, they may have think very carefully now about the source and go to a more specialist provider So for some data centers, it could be a big opportunity You're gonna find that I think the in-house data center will probably come more more obsolete and they'll have to go into a third-party managed color with experienced expertise on how to provide Green sustainable services Yeah, I think that kind of echoes what we heard that a recent interesting event But we were saying actually these regulations can drive a lot of business Yes, it can be a pain for some but they can also drive a lot of business Into that it's interpreted So is that what you're seeing in Europe and that's where you especially within tier two markets Are you seeing these regulations already pushing some development to into the ground? I'm not sure yet. It's not quite happening I mean what we're seeing is I think we're seeing enterprises actually asking questions now of their suppliers and saying how green are you? What kind of renewable energy do you have? Are you looking at the different types of emissions like the scope one, which is basically your direct Emissions what you actually provide yourselves and there's scope to which is what is in your supply chain And that's something which they're asking for of their co-location providers and data center vendors, which they're using and that part of their Exercise now so we're seeing there's a lot of large companies and it's going to start filtering down I think the SME small medium size sector as well because they will probably have to start reporting as well at some stage and You know Europe and the UK the UK's got a similar ambition I think to actually go to be a carbon neutral society by 2050 The route map for that is a bit unclear, but probably it all mean You know it's going to be a huge amount of change and that some regulatory burden that we have to accept I think the larger data center companies that people like equinex, Digital Realty and others who have this kind of experience already Will be able well positioned to actually take on more more capacity I think and more enterprise users as a result I think it's going to be quite in the end quite healthy for the industry because everyone will have to just Try and adapt and you've seen cloud service providers do this over a long period of time now Microsoft I think about two or three years ago two years ago They introduced a online monitoring tool talking about carbon efficiency in that cloud And this is something which has started to happen with the cloud service providers and now they're data center providers and others We're going to have to follow suit as well. A lot of this technology is Not necessarily proprietary even talk to people like there are all kinds of data governance type companies like Archer which used to be part of RSA who provide this kind of service as an online tool And so enterprises will have to start adopting this as part of their ESG reporting I think to actually just see how clean they are and what kind of Impact they're having on the environment So it's quite a big change, I think And I think hopefully a change for the better. Yes, the red to good I don't think is you mentioned like the big Isaac equinique since to reality They they will potentially gobble up quite a lot of the enterprise demands out of these new regulations coming into into the market How so what will be the play of the the smaller players of the boutique data centers of the ones they have one two facilities Do they have a space? Are they going to struggle? I Think it's interesting because it's starting to see a bit of consolidation going on in the market So what what has happened over the last few years? You've had enormous amount of funds coming into the market private equity new investment funds come again And they've actually financed a lot of new build Data centers so you're talking about Vantage you're talking about Digital bridge with Vantage and so on and you're talking about a lot of other companies And some of these companies now are looking to actually have Consolidate more and will become bigger. I think so you'll probably see more Companies coming into the market and merging and acquiring others. That's been a factor in the UK and in Europe I think it's going to continue happening. So you'll probably have a bit of a shakeout But I think at the same time the two the smaller Data centers will have to be based of a choice whether to to merge with other companies or whether to Actually become more of a specialist and say a hosting environment or a managed service type provider Rather than actually try and offer pure color There's also talk about the age and whether that's going to grow or not and that's always been going on for a long time now It's always difficult to see where the actual commercial Imperative is we understand that there would be a need for you know with IOT and things for local computing type services But so far it seems to be provided for by the traditional color providers Soon to have a huge kind of requirement for the small diversified data center this year Interesting. I think as you were talking and especially talking about partnerships It kind of remind me of what happens in the post-Brexit years Where you UK companies and European companies partnering up like vaulted data centers, which doesn't exist anymore I think it's now part of very global which partner up looks connects And they they were operating. It was almost like a single company, but with two brands Yes, it's a very streamlined partnership. So maybe there was a warm up for what's coming in the next So I think as well. There's still a lot of talk. There is some companies trying to sell themselves I think on the market at the moment and probably familiar with sub-bottom and that's gonna happen I think and so there will be more industry groupings being formed. I think in the data center business On the whole it's because of a hyperscale is such a big investment class And so you need to have scale on you need to have finance to actually allow yourself to compete in that kind of market But also another thing which is happening is you're getting with tier two tier three markets coming along And then you're gonna see some interesting changes. I think if Central Europe takes off for example, we're talking about Connectivity around the Mediterranean for example the likes of Greece likes Barcelona likes of different Parts of the med where you're gonna see content providers coming in when it could be a very interesting market even to see Some more specialist providers I think moving to those areas and offering a kind of content hub with connectivity to a cable landing station Which is gonna be active to some users so It is really interesting. It's vicious. So sorry that's starting to happen So the Mediterranean you're getting connectivity down to the Middle East and to Asia and to Africa That's quite an interesting market for a data center provider So, you don't necessarily need to have a big scale or a big hyperscale provider What you need to have is the connectivity and the connection to a landing station Yeah It's interestingly the same because that there's a leash what's happening on the ground I mean if you look at start campus in Portugal for instance, it's big play a big money big campus Getting in all the cables in including a new one called it at least people with a link Try integrate the bridge between the Atlantic and Central Europe and the whole concept revolves around energy So and I think that's the new business model for that is and it's the energy side of things Ways no longer. Let's build something to host data. Let's build something which is green first and then let's look at the data and the service Not necessarily like that, but you know what I mean? Yeah Yeah, so I think green energy is very interesting But the funny thing is the European markets who's you're making a reasonably good attempt Transition to a green energy for the first time. I mean, I looked at the national grid ESO they have a kind of real-time chart which talks about the power they're generating And about 40 to 50 percent of it now is renewable power So that is generally offshore wind from the Northwest and Northeast and from Scotland Which is being generated throughout the UK and we sent so that's slowly happening in Europe as well It's happening in Italy. It's happening in Spain. It's happening in other countries. So It's quite a big step forward. I think yeah, yeah I mean, it's without wanting to go into it But it's one of the side effects from the only positive side effects of this one Ukraine has been the push for for different sources of energy And a big push towards renewables. So maybe these speed it up a little bit the process By governments across the continent. So it's probably the only good thing that came out of it but You'll probably have been better just to be a bit delayed as opposed to having what we have But thank you. So if we quickly looking to what CBR is doing, it's going to be doing over the next few months Can you lift the veil a little bit on what's going to come from you? Try? I mean, we're doing a webinar every quarter. So there'll be one coming up very soon Which I'll try and send you details on which is talking about the flat market. So the flat D market So that is from Frankfurt London Amsterdam Paris and Dublin So, you know, we talk about the trends which are taking place there and the growth in those markets We're still there about 70% of the market around around Europe in the area region but we're also looking at doing research into Africa and That's going to be cut something which is coming out later on this year And we're also looking at the Middle East as well because the Middle East is never country never a region There's a huge amount of grip going on and we heard about what's happening. Obviously in Saudi Arabia huge new investment in in capacity for data centers and IT as a whole for driving the whole new economy and It's happening in UAE and it's going to be happening in a lot of other countries around the Gulf States as well So that's something which we're going to be looking at and we're also trying to expand our coverage into, you know The kind of emerging markets and we're talking about Milan to some extent We're talking about Madrid which are two big kind of growth areas we see in Europe at the moment But also looking at the likes of the Nordics and we're looking at Central and Eastern Europe as well So it we're going to be extremely busy getting quite a bit of client work getting quite a bit of transaction work It's interesting in a way being in CBRE because you've got a crossover point between the the users the end users some of whom we manage And also the the actual hyperscale providers as well are coming to us to keep the land kinds of areas where they can build on so we get the kind of Both ends of the spectrum. There's the small enterprise user and that would be large hyperscale company as well You're gonna be very very busy I can tell If you want to reach out, what's the best way to reach out to you? Well come to the CBR e.com website and look for data center services DCS or data center solutions and That will be give you Access to resource we have online and also have a look at our LinkedIn page as well Because we're always going to have details the data center solutions on new services Bringing out new reports and also details on our forthcoming webinars as well Well, Keith as always is a pleasure speaking to you. I could stay here for hours Because if we go into each market, then we have conversation for days Pleasure as always Thanks so much and thank you you for joining us today and watching JSA TV live Don't forget to check our social channels for more content until next time. Happy networking