Europe's classic data center hubs – Frankfurt, London, Amsterdam, Paris and Dublin, collectively known as FLAP-D – are reaching their physical limits. Grid connection waiting times of up to 13 years, scarce land and rising energy costs are forcing hyperscalers and infrastructure owners to fundamentally rethink their site strategies. The result: European secondary markets are currently growing at twice the rate of established hubs – and offer strategic opportunities for hyperscale infrastructure owners like ArcTeron that are no longer available in primary markets.
The Limits of FLAP-D Markets
Frankfurt, with approximately 970 MW of installed IT power, is the largest continental European data center market – and simultaneously one of the most constrained. The vacancy rate stands at just 3.1%, and new grid connection applications in parts of the Rhine-Main area will not be served until the mid-2030s. Similar bottlenecks characterize London, Amsterdam and Dublin, where regulatory restrictions further slow the construction of new hyperscale facilities.
The consequences are measurable: according to JLL analysis, the average distance of new hyperscale projects from major hubs has nearly quadrupled from 46 kilometers (2022–2025) to 175 kilometers (2026–2028). Greenfield projects outside metropolitan regions already account for 39% of all planned capacity in the current pipeline – compared to 20% in previous years.
Secondary Markets: Nordics, Iberia and CEE on the Rise
Nordics: Renewable Energy and Natural Cooling
Sweden, Norway, Finland and Denmark offer a combination of factors that is nearly ideal for hyperscale operations: electricity from almost 100% renewable sources (hydropower, wind), natural cooling from the climate, stable political frameworks and comparatively short permitting procedures. Equinix underscored this attractiveness with its $4 billion acquisition of atNorth (1 GW development pipeline) in 2026.
For infrastructure owners, the Nordics market means: lower PUE values through free cooling, lower energy costs and a clear positioning for ESG-compliant hyperscale capacity.
Iberia: Sun, Wind and Strategic Location
Spain and Portugal are developing into significant data center locations, driven by favorable energy prices from solar and wind power and their geographic position as a hub between Europe, Africa and Latin America. Madrid is growing particularly dynamically as a secondary market; Lisbon is positioning itself as a gateway to Atlantic submarine cables.
Challenges remain: water scarcity in parts of Spain (Aragón) makes water-free cooling concepts mandatory, and grid infrastructure in rural regions must first be expanded for hyperscale loads.
CEE: Catch-Up Potential with Sovereignty Advantage
Poland, Czech Republic, Romania and the Baltic states offer lower land and construction costs, a growing skilled workforce and – particularly relevant – the ability to provide sovereign infrastructure for EU institutions and regulated industries. The European Commission selected four consortia for a €180 million sovereign cloud program in April 2026; CEE locations are playing an increasingly important role.
Why Infrastructure Owners Must Act Now
The European Data Centre Association (EUDCA) estimates the investment requirement for European data centers at €176 billion between 2026 and 2031 – an average of €25–26 billion per year. By 2035, it is estimated that half of all European data center capacity will be located outside the FLAP-D cluster.
For owners of hyperscale infrastructure, this creates three strategic imperatives:
1. Early Site Acquisition
In secondary markets, sites with secured grid capacity are still available – but the window is closing. Those who secure sites with guaranteed grid connections, water availability and permitting prospects today create a competitive advantage that is no longer replicable in primary markets.
ArcTeron pursues exactly this strategy: as an owner and financier of hyperscale data centers (own-and-hold), ArcTeron identifies and secures sites in European growth markets before demand exceeds available capacity.
2. Integrated Energy Strategy
Secondary markets often offer direct access to renewable energy sources – but only if energy supply is integrated into site planning from the outset. ArcTeron Energy, as part of the corporate group, develops tailored energy solutions: from power purchase agreements (PPAs) with local generators to grid integration and backup capacity from gas or LNG systems for the transition period.
3. Regulatory Positioning
The European Commission proposed a common rating scheme for data center energy efficiency on September 21, 2026. It is also preparing minimum performance standards (expected Q2 2027). Infrastructure owners who invest today in secondary markets with a high share of renewable energy are optimally positioned for these regulatory requirements.
Market Data: The Growth of Secondary Markets in Numbers
The European colocation market is growing at a CAGR of 13.3% and is expected to reach a value of €41 billion by 2030 (2025: €21.97 billion). Secondary markets are growing at twice the rate of FLAP-D hubs. Overall IT power demand in Europe is growing at a CAGR of 17% through 2031.
Particularly relevant: PwC forecasts in its Global Data Centre Outlook 2026–2050 that Europe will attract $5.6 trillion in data center infrastructure investment by 2050 – a significant portion in markets that today are still considered secondary.
ArcTeron: Own-and-Hold in European Growth Markets
ArcTeron pursues a clear own-and-hold strategy: hyperscale data centers are not developed and sold, but held in the portfolio long-term. This strategy is particularly effective in secondary markets because:
- Value appreciation potential: Sites in emerging markets such as the Nordics, Iberia or CEE offer higher value appreciation potential than already saturated primary markets.
- Long-term leases: Hyperscalers and cloud providers often sign longer leases in secondary markets, as site alternatives are limited.
- Energy partnership: ArcTeron Energy can develop tailored energy solutions in secondary markets that additionally secure and differentiate the site.
With a target of 5 GW of hyperscale capacity in its own portfolio, ArcTeron pursues a geographically diversified strategy that deliberately leverages the growth dynamics of European secondary markets.
Conclusion: The Geography of the European Data Center Market Is Changing Fundamentally
The shift of hyperscale investments from FLAP-D hubs to European secondary markets is not a temporary phenomenon, but a structural transformation. Grid bottlenecks, energy costs and regulatory requirements are making sites in the Nordics, Iberia and CEE increasingly attractive for infrastructure owners compared to traditional metropolitan regions.
For ArcTeron as a European hyperscale infrastructure owner and energy partner, this means: the opportunities lie where others are not yet – in markets with available grid capacity, renewable energy and growing demand. The strategy of investing today and holding long-term is the key to value creation in the new geography of the European data center market.
ArcTeron is a European owner and financier of hyperscale data centers and an energy partner for digital infrastructure. More information: arcteron.ai