Spain has positioned itself as a data centre hub thanks to its strategic location as entry point to Europe of the submarine infrastructure coming from the Americas and Africa. The digitalisation of the Spanish economy is also driving investment in the data centre market.
The country ranks seven out of the 27 EU member states in the Digital Economy and Society 2022 index, with a public cloud services market that has grown over 64% since 2019.
Madrid is a strategic point of connection in the technological infrastructure network between America, Africa and Europe.
The capital of Spain is the main telecommunication node in the Iberian Peninsula, with several internet exchange points, to connect the traffic from submarine cables landing at the Spanish and Portuguese coasts.
Madrid therefore leads the positioning of Spain as a key destination for the data centre industry. The Madrid region reached 147 MW of installed capacity in 2022 after growing by 42.7%, according to Spain DC, the country's data centre association.
The power capacity is forecast to grow at an average annual increase of 42% until 2026, 24 percentage points above the average increase of the "FLAP "markets, Europe’s established digital hubs of Frankfurt, London, Amsterdam and Paris.
By 2026, the Madrid Data Center industry could reach a capacity of 613 MW, equivalent to approximately 70% of the Paris or Amsterdam markets.
Madrid's data centre growth strategy is backed by public institutions. The Regional Government of Madrid has recently launched the Office for the Promotion of Data Processing Centres, which aims to consolidate the region as a digital hub in Southern Europe. The government has identified a minimum of 20 public plots, totaling over 80,000 square metres, for the installation of new data centres.
Direct investment in the sector in Madrid is forecast at €6,310 million until 2026, according to DC Spain.
Real estate investment in Spanish data centres has been growing since the MAREA cable from Virginia in the US into Bilbao came into operation in 2018 and the Grace Hopper, which runs from New York to Bilbao, in 2021. The 2Africa cable, which will circle the continent, landed in Barcelona in 2022.
Although Madrid continues to be the favourite destination for the development of this type of assets, data centre projects are expanding to Barcelona and Bilbao, in the Basque Country.
Merlin Properties Socimi, the leading Spanish real estate investment trust is developing three data centres in Madrid, Barcelona and Bilbao totaling more than 65,000 square metres with a capacity over 58 MW. The Bilbao-Arasur development in will have 23,150 square metres in the first phase with a potential increase up to 100,000 square metres and 100MW capacity.
Panattoni, the US-based real estate developer, announced in April it would purchase a 60,000-square-metre plot, just 20 km from Barcelona, to build a 68,000 square metre technology campus, which is expected to be the largest data centre to be developed in Catalonia, with an installed capacity of 42 MW. The estimated investment for the development is €300 million.
Nearby, AQ Compute, the data centre business of the German fund Aquila Capital, is developing a data center with a capacity over 50MW which is planned to be ready for operation by mid to end 2024.
Despite the current economic slowdown, the information and technology sector, which is the driver of data centre demand, continues to grow.
The pushback on new data centres across different European markets because of sustainability and energy consumption issues is set to drive demand to Spain, which has less strict rules.
Lower energy consumption rates and high use of renewable energy in Spain is a competitive advantage and data centres are set to further develop in Spain where supply is scarce.