The boring answer: It depends.

With local governments of traditional data center locations being less eager to host new facilities due to grid congestion and other challenges, service providers are looking for alternatives. But if not in the FLAP (Frankfurt-London-Amsterdam-Paris) regions, then where?

There are good reasons the traditional data center locations are so popular. They are situated close to Europe’s most important internet hubs, historically offering fast and reliable access to the internet. As time went by, connectivity improved outside of these regions however, narrowing the gap between these core regions and other areas in Europe. That trend will continue. As one industry insider notes in a paid-for op-ed for Data Center Dynamics: “There is a huge amount of investment waiting to move into tier two regions, and this will bring a number of emerging metropolitan markets closer to the FLAP regions.” 

Combined with the broader issues of grid congestion and stricter permitting, and choosing alternative locations has become not only viable but in some cases a necessity. It’s no coincidence some of these second tier locations have been promoting themselves heavily the last few years.

What regions are worth it for hosting, though? It generally depends on the specific needs of the service provider. Geographical location still has meaning when it comes to connectivity and service access, for example, and proximity to target customers will keep playing a significant role in selection. 

Proximity: BeNeLux outside of Amsterdam

Over the years, Amsterdam and its direct surroundings has become less attractive for service providers to move in to. Existing facilities are filled to capacity, site development has slowed down due to stricter permit policies. Similar concerns apply to Frankfurt and Paris. However, the prevalence of fiber and small distances has given rise to facilities outside of the direct AMS-IX region, including Belgium and Luxemburg. Even the most ‘remote’ of these data centers tend to be at most a couple of hours by car from the main business centers. And since most of these facilities are situated on fiber routes between Amsterdam, Frankfurt and Paris, they can almost always offer a backup option to a second internet exchange if needed.

However, while not as fast as in Amsterdam, Frankfurt or Paris, grid congestion is slowly becoming a concern for these locations. Also, some service providers might balk at the prospect of having their critical facilities below sea level. 

Sustainability: The Nordics

In data center operations, the Nordic countries -Denmark, Sweden, Norway, Finland and Iceland- have two things going for them: access to green, sustainable energy, and a cool climate. It has almost become a cliché for these countries to boast ample amounts of thermal, hydroelectric and wind energy, which make it an attractive proposition for businesses looking to reduce their Scope 2 and Scope 3 emissions. The reduced dependence on carbon fuels also make power downright affordable compared to other European countries. Add to that the extreme political and economical stability, and it’s no coincidence that predominantly hyperscalers and HPC facilities are already choosing the Nordic countries for their facilities.

The Nordics do have some obvious downsides, however. Connectivity with the rest of Europe is good, but the sheer distance to main internet exchanges might be a problem for some. These countries are also known for relatively high taxes and wage costs, and the lack of a large population can make it challenging to find professionals to run and maintain services.

Opportunity: Eastern Germany and Central Europe

Central Europe has seen significant economic growth, which has also resulted in data center investments. Countries like Poland, Czechia and Slovakia have seen steady growth over the years, and the same goes for the Baltic countries. Estonia in particular has risen to be a technological player on the continent. Meanwhile, Berlin offers a cheaper and easier alternative to Frankfurt, while Austria has always been a safe bet. Service providers looking for new clients have a good chance of finding them in these regions, which is also relatively affordable when it comes to wage and rent costs.

The downsides are the large distances to internet exchanges, and that the digital infrastructure is not yet up to par with the western part of the EU. Digitization is -with the exception of Estonia- not yet as mature either.

Of course, there are more possibilities, including Southern Europe, South Eastern Europe or even Ireland. Which location for offering IT services is the best always depends. There are many possibilities, but each location needs to be considered carefully. However, regardless of where you decide to migrate to a new data center, and understanding of your own data center is key. To illustrate, a service provider we worked with performed an Effective License Position (ELP) report to determine where they could use current licensing rules to consolidate servers and other assets. This helped them to cut costs and ensure compliance. To learn more about our ELP services, check out this link.