The European colocation market is addressing the demand gaps for datacentre capacity caused by the decreasing interest of hyperscale cloud firms by collaborating with neocloud providers, according to research from CBRE.
CBRE’s third-quarter analysis of the European datacentre market shows that while there has been a decline in hyperscaler demand for colocation capacity, there has been a significant increase in the acquisition of capacity for hosting artificial intelligence (AI) workloads.
This surge in demand is coming from “neocloud” AI-infrastructure providers like Nscale and Coreweave, with CBRE’s data indicating that the amount of datacentre capacity sold to these entities has tripled over 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,” stated the CBRE report.
While London saw the majority (68MW) of the 114MW of new datacentre supply that came online in the third quarter of 2025, the Nordics emerged as the preferred location for neocloud providers to acquire capacity.
“More than half of the signings’ volume (57%) is for capacity in Nordic countries, such as Norway and Iceland, where regional datacentre providers can offer neocloud providers resource-intensive computer equipment, lower power costs, and available capacity that is increasingly scarce in Europe,” the report highlighted.
Kevin Restivo, director of European datacentre research at CBRE, emphasized the cost-saving benefits of choosing the Nordics for AI infrastructure providers due to the availability of lower-cost renewable power.
Market concerns
The rapid growth of certain neocloud providers has raised concerns within the IT industry, with companies like Nscale gaining prominence quickly and securing substantial external investments.
As noted in the CBRE report, the lack of a long-standing track record for some neocloud providers has not gone unnoticed by the colocation community, prompting operators to take precautions to mitigate risks associated with working with them.
“Despite their significant AI infrastructure requirements and limited operational histories, most European datacentre providers are leasing capacity to neocloud firms while implementing measures to mitigate the additional risks involved,” CBRE explained. These measures may include higher rents to cover the higher risk, rental deposits, and parent company guarantees.
Andrew Jay, head of datacentre solutions for Europe at CBRE, mentioned that neocloud providers are also helping colocation companies by utilizing vacant space originally intended for hyperscalers. This trend indicates a growing acceptance of neocloud providers among datacentre operators.
