CBRE charts rise of neocloud providers within European colocation market
Real estate consultancy CBRE’s latest colocation market tracker shines a light on the impact neocloud providers are having on the supply and demand dynamics of the European datacentre market
The European colocation market is plugging the demand gaps for datacentre capacity caused by the waning appetites of hyperscale cloud firms by cozying up to neocloud providers, research from CBRE shows.
The real estate consultancy’s third quarter look at the state of the European datacentre market reveals that, despite a drop-off in hyperscaler demand for colocation capacity, the amount being acquired for hosting artificial intelligence (AI) workloads has soared.
The source of this demand are “neocloud” AI-infrastructure providers, such as Nscale and Coreweave, with CBRE’s figures showing the volume of datacentre capacity sold to such entities has trebled over the course of the past year.
“The volume of datacentre capacity sold to neocloud providers in the first nine months of the year rose to 414MW, up from 133MW compared to the same timeframe in 2024,” said the CBRE report.
While the report flagged London as being the location where the majority (68MW) of the 114MW of new datacentre supply that came online during the third quarter of 2025 was delivered, it also confirmed the Nordics as the most popular location for neocloud providers to take-up capacity.
“More than half of the signings’ volume (57%) is for capacity in Nordic countries, such as Norway and Iceland … [as] regional datacentre providers can offer neocloud providers … resource-intensive computer equipment, lower power costs and available capacity, which is increasingly difficult to find in Europe,” said the report.
Kevin Restivo, director of European datacentre research at CBRE, said power is often the greatest expense for AI infrastructure providers, so favouring the Nordics – where there is an abundance of lower-cost renewable power make sense.
“We see tremendous growth of this segment especially in the Nordics [for that reason], where lower-cost renewable power is often available in greater abundance than in many other European markets,” he said.
Market concerns
The meteoric rise of some neocloud providers has raised eyebrows in certain portions of the IT industry, with providers such as Nscale having risen to prominence seemingly overnight, having secured eye-watering amounts of outside investment.
As referenced in the CBRE report, the lack of history and track record some of these neocloud providers have has not gone unnoticed by the colocation community, with operators taking steps to mitigate the risks involved with doing business with them.
“Most European datacentre providers are accepting neocloud firms as tenants despite their considerable AI infrastructure requirements and short operational histories,” said CBRE. “Datacentre providers are taking measures to mitigate the additional risk take on by leasing capacity to neocloud firms. For example, higher rents are charged to account for the higher risk client and to help recover the considerable build costs incurred in building AI-ready datacentres. Rental deposits and parent company guarantees are sometimes asked of neocloud firms too.”
Andrew Jay, head of datacentre solutions for Europe at CBRE, said neocloud providers are also currying favour with colocation companies by “absorbing vacant space that was originally intended for hyperscalers”. As an example, the CBRE report referenced a case in February 2025 where a hyperscaler “halted talks” for datacentre capacity in Europe, leaving some operators with space to spare.
“It is a sign that many datacentre providers are growing more comfortable with the ambitions of neocloud providers and the covenants that come with it,” added Jay.
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