London’s Future: Digital Infrastructure as a Growth Driver

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London’s Future: Driving Growth Across Real Estate

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Data centres underpin the systems that power financial markets, healthcare, consumer, digital, and creative sectors. Data centres are increasingly at the heart of London’s economy and are integral to the city’s future growth, resilience, and competitiveness.

London is Europe’s largest colocation market and accounts for over 80% of the UK’s national supply. Over the past two decades, the city has become a pivotal hub for digital infrastructure and is now a burgeoning centre for AI development.

Figure 1: London new supply, 2020 to 2026F

Source: CBRE Research

AI and Hyperscale Demand are Setting the Pace

The growth of AI activity in London has created a further boost to the already considerable demand for digital infrastructure. We forecast a record 211MW of take-up in London this year, with demand expected to exceed supply for a fourth consecutive year.

AI labs are investing in London for several reasons including strong connectivity through fibre, internet protocol (IP), cloud, international networks, and a deep talent pool. At the same time, technology companies with existing operations in the UK continue to invest in the capital. This promotes innovation, encourages the exchange of ideas, and stimulates economic growth.

The growth of AI is driving fundamental changes to infrastructure requirements and increasing the complexity of data centre delivery for developers. Compute intensity is rising, rack densities are increasing, and demand is becoming multi‑layered – blending enterprise, AI training, and cloud workloads. The pace and scale of AI‑driven demand is making delivery more difficult, and limited power for new schemes is the leading challenge.

  • 211MW

    Forecast take-up in London, 2026

  • 185MW

    Forecast new supply in London, 2026

Power is the Defining Constraint on Growth

In the future, access to power will shape market growth. Hyperscalers and neoclouds require the scalability of power and data centre capacity to accommodate new applications and meet rising customer demand, in large part due to AI.

Grid capacity is limited, connection lead times are lengthening, and competition for supply is intensifying. Power availability is defining how and where data centre capacity is delivered and heightened planning complexities are also forcing developers to rethink site acquisition strategies. Decisions made early in site selection and strategy directly influence long‑term returns.

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Sustainability Is Raising the Bar for Delivery

Sustainability is also underpinning development decisions. Grid upgrades, renewable integration, and operational efficiency are prerequisites for future investment.

Investors and occupiers increasingly link sustainable performance to long‑term value and risk. Developers are aligning site selection with power availability, clean energy sourcing, and sustainable design principles.

Critical National Infrastructure

The market has entered a new stage and navigating it now is more challenging. However, as UK policy evolves, the strategic role of data centres as infrastructure vital to national resilience is becoming clearer.

With data centres now recognised as Critical National Infrastructure, ensuring power is available for new data centres will be key to the growth of the London market. To that end, different power delivery options (including on-site delivery and behind-the-meter services using private wire connections) may be employed at scale to help relieve the pressure on the grid. These reforms could allow data centres to supply any excess power back to the grid to be re-used by the local community; providing the local area with a key benefit for new data centre investment.

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Navigating a Complex Market

Securing power, managing planning risk, meeting sustainability goals, and delivering capacity at scale are all interdependent challenges for London to sustain its strong global market positioning.

Despite increasing complexities, London’s data centre footprint is still growing; we expect 185MW of new supply to be delivered in London this year following a record year in 2025 of 192MW. Growth expectations are supported by the construction of data centres in areas outside of the typical development hotspots; activity is expanding beyond the traditional West London corridors and into surrounding areas where grid access and planning certainty are stronger. The result is a more distributed digital ecosystem across the South East.

The medium-term outlook for London will depend on the ability to remain competitive by balancing speed to market with infrastructure readiness. And the degree to which key market players can effectively interpret market signals, quantify risk, and execute with confidence in an increasingly fast-moving environment will dictate the capital’s ability to maintain its leadership in digital infrastructure.

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