The UK's data centre industry is experiencing robust growth fuelled by the surge in digital technologies and the impact of landmark projects.

Both resource-intensive and demanding on an operational level, data centres have prompted the need for innovative solutions to ensure efficiency, stability, and resilience. 

Specific challenges facing the UK include power consumption and energy usage, inconsistency in the application of planning policies, and reported shortages of skilled labour. These factors emphasise the need for comprehensive planning between key stakeholders, the adoption of sustainable practices to mitigate the impact of the industry, and cross party collaboration to create effective solutions. As the UK's data centre industry continues to grow, sectors like construction must adjust to meet its complex demands.

Financial institutions, including banks, are actively supporting growth of the industry. A noteworthy example is Barclays' launch of a £600 million commercial securitisation of two data centres with Vantage, the first of its kind for data centres in Europe. With asset-based lending on the rise in the European private debt market and the higher cost of debt associated with interest rates (expected to remain above 3% until 2025) it is critical for businesses to understand the various funding options and their implications.

Our recent experience in the construction industry shows that funding as a whole has been more challenging to secure. We have seen increased activity across the number of pre-lending reviews for both existing and new to lender customers alongside increased requests for independent business reviews for business operating with thin margins and limited headroom on covenants and cash.

Collaborating with business, lenders, and investors we have assisted through providing tailored advice and insight in a market with increased pressure on businesses. Gaining support from advisers to navigate these complex investments is often crucial for businesses. From securing finance for potential growth to understanding the associated costs and risks involved, support from experienced advisers is invaluable in informing decisions in an ever-evolving landscape.

Market analysts forecast continued growth for the industry, with a compound annual rate of 6.1% through the next five years (increasing from 4.8% across the previous five). According to Turner & Townsend’s 2023 Data Centre Cost Index, this growth trajectory has positioned London as Europe’s primary hub for data centre expansion, which reached an estimated operational capacity of 1GW at the end of 2023.

In addition to Goldacre's proposed project in Newnham, other ambitious projects such as Google’s data centre in Hertfordshire; Canieal’s proposed site in Basildon; and Vantage’s acquisition of the former Ford engine plant in Wales highlight the sheer growth of the industry across the UK. Slough Trading Estate is now considered to be the largest data centre hub in Europe with approximately 35 currently based in the area and more facilities stated as being on the way. This has largely been attributed to Slough being a prime location in relation to the main fibre optic line between the UK, Ireland and the US –  and the cluster of existing centres attracting others to join.

As the UK data centre industry grows, the construction sector must innovate and adapt to meet its complex demands. Embracing sustainable practices and collaborative strategies will be crucial for supporting this dynamic industry's expansion.