Madrid + Barcelona is an up and coming data centre colocation market that is in the very early stages of growth. The market here has historically been underdeveloped. Spain has a conservative IT outsourcing culture and on-premise data centres and server closets have persisted. Migration to colocation environments, and public and private cloud services, has been slow and gradual, but there are signs on the ground that things are about to change.
Accelerating public cloud adoption is the driver that puts Madrid on the cusp of becoming a full-fledged hyperscale market. All the major public cloud platforms – AWS, Microsoft Azure, Google Cloud, Oracle and IBM Cloud – will open cloud regions in the Madrid area, starting in mid 2022 with AWS. As is often the case in a new market, the hyperscale clouds are using wholesale colocation to build out their footprints and only AWS has chosen the self-build path. This has primed the demand pipeline for colocation and precipitated the entry of several new entrants.
Despite being a major metropolitan centre, Madrid has taken some time to get here. Not only have traditional computing models prevailed, but building third party data centre infrastructure has not been easy. There are challenges around permitting and the supply of power is constrained, while also involving a lengthy procurement process.
Nevertheless, Madrid + Barcelona presents significant opportunity and upside. Madrid is an Internet traffic hub and home for major enterprises in Spain. It is also a cultural centre that has influence and reach across Iberia and to Spanish speaking countries in Latin America. The implications for digital content are endless and it all circles back to infrastructure, clouds and data centres.
The density of networks and connectivity developing around Iberia are elevating the strategic importance of both Madrid and Barcelona. Subsea cables are landing on the coasts and connecting through to Madrid, while Barcelona is a landing point that is reaching critical mass and being looked at as an alternative to the highly strategic Marseille market. Just as we see in France, there is a hub and spoke dynamic emerging between Madrid and Barcelona that will shape how and where infrastructure is ultimately deployed. Once the public clouds land, and critical mass is reached, there will be a push to connect with the clouds and that will have a positive impact on the interconnection-oriented parts of the retail colocation market as the market continues to mature though the next decade.
The Madrid + Barcelona data centre colocation market continues to scale. In 2021, the Madrid market is projected to be valued at €130.2 Euros and grow at a five-year CAGR of 29.6%. The bulk of activity will continue to focus around Madrid. Inventory in Madrid — projected to be ~70MW in 2021 — is being built out aggressively to support the hyperscale cloud wave set to land and will see the total capacity of the market effectively double twice in the period between 2020-24.
This report is an excellent resource for any service provider, investor or enterprise end user looking to understand and project the data centre market in Madrid and Barcelona or find a service provider.