Data Centres

January 2026 Forecast

Near record supply increase for 2026

London accounted for 80% of UK supply in 2025. Supply growth was forecast to reach 193MW in 2025 and grow further by 180MW for this year, totalling 373MW of new supply over a two-year period.

Midyear review

• We now forecast a larger increase in new supply, to 185MW this year, supported by strong demand from hyperscalers and neocloud providers. Hyperscaler demand has re-emerged following a pause in leasing activity for much of 2025.
• London continues to grow its UK market share. As of Q1 2026, it accounted for 83% of total UK supply. New campus developments are planned in adjacent markets such as Elstree and South Mimms in the north of London.

January 2026 Forecast

Hyperscalers have returned to the London market

Despite the pause in some contracts in 2025, hyperscalers re-entered the market towards the end of the year and their demand is forecast to increase further in 2026.

Midyear review

• Select hyperscalers are acquiring increasingly large leased campuses in London (in the range of 50MW up to 200MW), an increase in scale due to the impact of AI. Land with power is an increasingly scarce commodity.
• Hyperscalers and data centres are being planned in areas adjacent to London where power is available and are accepting some increase in latency, the time taken for data to move from its source to destination, in return for secure and scalable power. Data centres are being used to accommodate a series of needs, including AI training, AI inference (for enterprise users), and cloud workloads.
• Although power capacity is constrained in areas such as Slough, new sites are planned outside the M25 around Hertfordshire and Oxfordshire to the north of London and in Essex to the east of London. The sites that are being planned now will enter the market in 2028 or 2029 depending on grid availability.

January 2026 Forecast

AI is an important demand driver for the London area

AI has become an important source of demand in London. Although the enterprise adoption of AI is at an early stage, the market is being driven by the adoption of AI by the neoclouds and hyperscalers. In 2026, new developments will need to cater for higher power densities and the increased floor loadings required.

Midyear review

• After pausing their activity during 2025, the priority of the hyperscaler has been to lease capacity suitable for AI workloads. In some cases, hyperscalers have leased capacity from a neocloud operator.
• Neoclouds are acquiring capacity close to London and are prepared to pay premium rents as core locations and speed to market are priorities.
• Neoclouds are placing their compute workloads in London in response to demand for low-latency compute, for example, from key enterprise customers in the finance sector, as trading and quant firms require proximity to their end users.
• The AI growth zones, introduced by the Government to support data centre capacity in the regions, have had limited impact to date, although they are still at an early stage of development.

H2 2026 Outlook

London’s take-up is forecast to reach a record high

Take-up in the London market, the UK’s dominant data centre cluster, is projected to exceed 212MW by the end of the year.

Increasing demand is expected to push take-up beyond the nearly 193MW recorded in 2025. As a result, London is set to surpass the 200MW take-up mark for the first time.

The increase in demand for 2026 is forecast to outstrip new supply. As a result, the vacancy rate in the market is projected to fall to 5.5% by the end of this year. This compares with a vacancy rate of 8.6% in 2025. Vacancy is forecast to be at an all-time low in the London market, reflecting the strength of demand and the relative lack of new supply.

Operators in London will continue to expand their presence in adjacent areas to the existing cloud availability zones where land with power is less constrained, allowing more supply to enter the market. Examples include campus developments to the north of the capital by Ark Data Centres and Equinix.

Although work has started on the new DataVita and QTS campuses located in the AI Growth Zone at North Lanarkshire and Cambois in Northumberland, the other zones in Newcastle, North and South Wales, and Culham, Oxfordshire, have not attracted new data centre investment.

As a result, London is expected to remain the key driver of the UK market in the short-term, with a slowdown in new supply expected in 2027 before the next development cycle after recent growth.

Figure 8: London take-up in MW (2022 to 2026)