While most of the IT sector is battening down the hatches for a prolonged period of weak sales, data centre companies – from hosting service providers to the specialists who plan and construct these powerhouses of business – are seeing nothing but growth on the horizon.

A recent report from commercial real estate firm CB Richard Ellis (CBRE), predicts solid and continued demand across Europe for data centre space, suggesting that such facilities are proving considerably less affected by the financial slowdown than other technology markets.

Its latest numbers, covering the first three quarters of 2008, show that take-up of data centre space was just shy of the record levels set in 2007, reaching 93,080 sq m across the ‘Tier 1’ markets: London, Frankfurt, Madrid, Amsterdam and Paris.

And while take-up in the third quarter was down from the second quarter, it was still up 25% on the year-earlier period.

Corporate customers were responsible for 52% of market activity, driven by the push to increase savings by consolidating data centre holdings. Corporates were followed by the technology sector itself at 33%, retail transactions (individual letting smaller than 185 sq m) at 14%, and system integrators at 1%.

Within London, most of the 6,920 sq m take-up was by the technology sector (61%), with corporates at 21% and retail at 17%. The report noted a surge in availability in London to a total stock of 260,610 sq m, of which 70% was empty ‘shell’ space,

24% fully fitted and 6% central services space. The total vacancy rate for the quarter rose 5% on last year to 27%.

The report also observed that while demand “continues to remain buoyant in London”, large deals for empty ‘shell’ space in data centres (such as a major deal responsible for 81% of Paris’ third quarter market activity) were demonstrating that “London is no longer the only market where corporates have chosen to locate large new facilities,” the report says. Total third quarter take-up in London was down by 80% from 34,440 due to one such deal in the previous quarter – such scale is clearly no longer unique to the UK’s capital.

Overall availability in the London market increased from 53,750 sq m to 70,460 sq m during the quarter, a rise of 16,710 sq m (31%). Of this availability, 70% was shell and core space, 24% was fully fitted space and 6% central services space.

As elsewhere in Tier 1 markets (see graph) once-tight vacancy rates are improving. The vacancy rate in London increased this quarter from 22.7% to 27%.

London could also see competition from other areas of the UK where a burgeoning number of data centre developments are taking shape, particularly Scotland. One of these promises to be the largest data centre in Europe: proposed by Lockerbie Data Centres, the Peelhouses Data Centre represents a £1 billion investment and will eventually offer 3 million sq ft of data centre space built alongside 1,000 new homes and a technology park.

Elsewhere in Scotland, Singapore-based Atlantis Resources has proposed a £300 million Morgan Stanley-backed ‘grid-less’ data centre powered by tidal generators in the Pentland Firth.

The CBRE report claimed that green issues remained “at the top of many IT directors’ agendas”, citing research by analyst firm IDC suggesting that “cost cutting was the number one reason firms looked to energy efficient technologies, such as virtualisation,” and that “nearly half expect to have a solid return on investment before rolling out a green strategy”.

CBRE acknowledged that while the figures appeared better than might be expected, the full effect of the financial downturn on the data centre market is yet to be felt, with 2009 figures expected to be less radiant.

CBRE’s head of technology for EMEA Andrew Jay said that while the market for data centre real estate, as a vehicle for rationalisation, would remain insulated from the crash befalling the residential sector, it would not be immune. “We do expect a drop in data centre demand in 2009, however we do not expect it to plummet, nor do we envisage it will experience the level of decline that other real estate sectors will because strong drivers still remain,” he said.

However, overall market sentiment continues to be “sustained” and “positive”, his report noted, with “carrier-neutral co-location providers, integrators and carriers all providing evidence of optimism towards general corporate demand, and newly announced development schemes showing that the data centre market is increasing its profile among real estate developers.”