52 (147) 2022

Real estate and construction

Changing real-estate sector – Poland’s riding high on Europe’s data centre boom

By Tomasz Łosek, director, head of Data Centre Sector in Poland, Turner & Townsend
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Poland has shown strong resilience throughout the pandemic, avoiding some of the economic challenges present in other European locations. The past two years have brought a change to the Polish real-estate market, with growth seen in the residential, logistics – and in particular – the data centre sectors.

Booming sector

Since 2020, Poland has grown into one of the largest data centre markets in Central & Eastern Europe with over 48 facilities currently operating and many more planned. According to the latest estimates from PMR, the next four years will see significant investments in the data centres in Poland, doubling the current capacity.

We have seen increasing demand on our project and cost management services from our clients in particular in the data centre sector. The past two years have brought an expansion of major players in the data centre sector in Poland, with some of the well-known developers and hyper-scalers entering the market.

The data centre boom in Poland, with Warsaw as the most dominant market, stems from a number of globally observed activities such as the rapid expansion of the internet of things, development of 5G networks, and a trend towards a fully digitally connected and enabled world, accelerated by almost two years of online working and socialising. According to a survey we’ve run among global experts working across the data centre industry as part of our annual Data Centre Cost Index, almost all of them believe that the demand in 2022 and beyond will be further increasing.

Poland’s success factors

Investors’ interest in the Polish data-centre market have been growing over the past two years due to factors including continuous economic growth, relatively low energy costs for non-household users and a highly skilled workforce. Construction costs are also playing a key role. Based on the Data Centre Cost Index prepared by Turner & Townsend’s cost experts, we can say that building a square metre of data centre in Poland is significantly cheaper than doing so in Stockholm, London, Paris or Amsterdam. Execution of a new data centre in Warsaw would require from investors half of the capital expenditure needed for building a similar facility in Zurich.

The growth is stimulated also by Polish government initiatives supporting the sector; including launching of the National Cloud with strategic partnerships from Google and Microsoft, as well as implementing hybrid cloud model for public administration institutions.

High demand for new data centres in the Polish market provides significant potential for the construction industry. There is much interest in data centres from large local construction companies, who are finding that traditional areas of work such as office buildings or retail have been shrinking for the past two years.

Challenging year behind

2021 was heavily marked by supply disruption, demand growth and cost increase within the data centres sector, in Poland and globally.

Most sector experts report that material shortages are causing delays to data centre construction and causing costs to escalate. With the supply-side crisis showing few signs of cooling off, managing escalating material costs and delays while meeting global demand will take a marked improvement in efficiency and productivity.

Growing demand puts a pressure also on execution timeframes. Considering a 30MW data centre, the industry norm used to be 18 months for its construction, whereas now, the drive is to complete them in 12 months. However, these timescales are proving unrealistic and are often missed in practice.

Modern methods of construction are a clear way to unlock progress, yet they are currently not widely used on data centre projects. The issue isn’t a lack of vision, but a shortage of relevant expertise within the data-centre market that must be quickly addressed, especially that modern methods of construction have the added benefit of being more carbon-efficient.

Growing importance of net zero

As the climate crisis continues to worsen, these resource-hungry facilities will face growing pressure to change. Many data centre leaders are coming forward with climate pledges, with the likes of Google, Microsoft and Equinix signing up to the EU Climate Neutral Data Centre Pact.

After five years of increasing the energy efficiency of data centre operations, little more progress can be made in that area. Reductions in carbon footprint must now come from elsewhere. One key area of opportunity is making construction less carbon hungry. It is still cheaper to build a new data centre rather than convert a former industrial space. But there’s a growing market for retrofit, and the relative ease of conversion – combined with the low carbon tally of retrofit – is why 58% of sector experts we surveyed expect the proportion of conversion versus new-build to increase year on year.

We believe that retrofit and adding alternative energy sources could help the data centre sector to fulfil its pledge on lower carbon footprint. That is why we are helping our clients identify the best solutions to support their ambition in creating a greener world.

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