The slow pace of planning reform, coupled with continued power constraints, could see the UK data centre market lose ground to global rivals.
That’s according to a new report from property consultancy Rapleys, which warns that the industry faces significant headwinds that could derail growth, which is estimated to be more than 5% a year at the current rate.
Rapleys estimates that the total value of the UK data centre market is now worth around £8 billion a year, with around 520 operational facilities across the country. That’s a fraction of the 5,000+ purpose-built centres in the United States, which is to be expected given the dominance of US tech firms and the size of the market, but the UK is now also beginning to lose ground to Germany.
This all comes at a time when the supply of data centres is already said to be ‘under strain’, as cloud, AI and high-performance computing drive soaring demand for capacity. It also comes despite the UK having a recent influx of big-ticket investors such as AWS, Equinix, QTS and Vantage.
Planning hurdles threaten growth
While the UK Government has chosen to designate data centres as Critical National Infrastructure – and even waved through a contested Buckinghamshire scheme on green-belt land – Rapleys says the planning system still treats them like warehouses under Use Class B8.
That classification brings calls for affordable workspace and high employment densities that clash with strict security protocols and low staffing levels typical of server farms. Add grid connection queues, rising power prices and post-Brexit labour shortages, and new capacity becomes hard to deliver at the pace the market demands.
Regional hubs and reuse
With land and power scarce in London, developers are pivoting to Manchester, Newcastle, the East Midlands and Liverpool, drawn by cheaper plots and growing pools of renewable energy. Rapleys also sees a ‘notable uptick’ in heritage conversions once deemed unviable – from mills to listed offices – as operators hunt for creative routes to market.
Kieran Rushe, Partner, Rapleys, commented, “We’re at a critical moment. The UK must move quickly to scale its digital infrastructure or risk losing ground. That means smarter planning policy, faster decisions, and a more informed approach to the sector’s importance.”