One of the fashion assets in the Spanish market and undisputed protagonist of the real estate sector in recent years are data centers. An interest that has easy explanation, since we live a unique moment for society in general and for the technological sector in particular, marked by the exponential advance of generative artificial intelligence and advanced computer science.
This jump is transforming industries and business models, generating a pressing need for digital infrastructure that support the immense volume of data that these technologies generate and process. In this context, the fever we are seeing through the Data Center is born and a unique opportunity for the entire Iberian Peninsula that we cannot afford to waste.
The region is in a privileged position for two fundamental reasons. On the one hand, its location as a strategic door for transcontinental data traffic is turning the Iberian Peninsula into the Neuralgic Data Traffic Center in Continental and Africa Europe thanks to its underwater connections with America, Asia and Africa. It is estimated that 70% of world data traffic passes through the Iberian Peninsula. On the other, its status as a leader in green energy generation and one of the lowest electricity costs in Europe.
These practically unbeatable structural conditions are joined by a third ingredient: the problems that the traditional flap market is going through (Frankfurt, London, Amsterdam, Paris and Dublin), which has been the backbone of the European Data Centers industry. These markets face more and more restrictions, due to the shortage of energy, the lack of soil and the limitations of the electricity grid, which opens a window of opportunity for the Iberian Peninsula.
And, if we compare it with other more developed European markets, Spanish can be considered an emerging market with great growth potential. A potential that still shoots more if we look across the Atlantic, since the penetration rate of these facilities in the US practically triples to that of Europe.
In this way, we have all the ingredients to succeed, but we cannot forget that attracting the investments that the great technological giants plan to develop in southern Europe is not a minor challenge. We have already seen how great announced projects were going to the fret as the electricity supply cannot be guaranteed – one of the greatest difficulties facing the sector – and the competition of other countries is fierce. Therefore, in order to become the digital hub in southern Europe, which we are convinced that we can become, both public-private collaboration and an adequate incentive system are necessary.
An incipient and fragmented market
The Data Center market in Spain has enormous opportunities, but is still in an embryonic and fragmented state. Within it, Merlin Properties has become one of the great protagonists thanks to a unique value proposal. A privileged position won thanks to the alliance signed in 2020 with Edged Energy, the global technological developer of sustainable data centers, to promote, build, equip and operate last generation digital infrastructure in the Iberian Peninsula.
Thanks to this alliance, our data centers are at the forefront of international innovation in sustainability, with a void water consumption and a very high efficiency in the conversion of electrical power into computing capacity. Currently, they are designed to offer the customer a PU of 1.15, in front of the 1.46 and global European average of 1.58, according to Uptime Institute. In addition, they work exclusively with electricity from renewable sources and their construction is especially conceived to minimize and compensate for their carbon footprint.
Also, they also have the most pointed technology on the market with a modular system that supports densities up to 70kw per rack with air cooling and 200kw per rack with a “plug-and-play” system of liquid cooling.
All this makes us referents in the market with an available capacity of 60 MW and another 200 MW in development. Today we are present in Spain and Portugal with facilities in Madrid-Getafe, Barcelona-Zona Franca, Campus Bilbao-Arasur and Campus Lisbon-Vila Franca de Xira. These campuses are joined by the recent protocols signed with the Board of Extremadura for the promotion of two large data centers campus in the provinces of Cáceres and Badajoz that could reach a capacity of 1 GW each.
In summary, in Merlin we have a unique position and an exciting future thanks to the visibility that our present and future projects give us.