Power constraints in major European data center hubs is driving investment to second-tier markets like Berlin, Madrid and Manchester, says Zahl Limbuwala, Operating Partner at Germany-based investment firm DTCP.

In a Cool Vector interview, Limbuwala explains the evolved landscape for data center investing across Europe, and stresses that knowledge of individual market regulations is critical for success.

Among Limbuwala's key takeaways:

• Europe's fragmented markets are driving investors toward tier-two data center locations. With tier-one hubs like Frankfurt, London, Amsterdam, Paris, and Dublin increasingly constrained by power distribution challenges and growing residential encroachment, DTCP sees opportunity in secondary cities such as Berlin, Madrid, and Manchester. "The emergence of Berlin is predominantly a way of getting access to power," says Limbuwala.

• Large-scale campus developments offer long-term alignment with Europe's renewable energy transition. DTCP’s recently launched GreenScale investment platform targets sites where massive data center campuses can integrate directly with renewable power sources, creating stable baseload demand while supporting national decarbonization goals. Limbuwala notes: "The larger data center campus developments - 200 megawatt plus and beyond - represent an opportunity to work with the grid providers, work with the renewable investors and developers, and really put together a cohesive proposition story."

• DTCP focuses on scaling companies that have secured permits, land, and power, but need capital and expertise to expand. Rather than speculative builds, DTCP invests in businesses with early momentum that can benefit from the firm’s operational, regulatory, and financial capabilities across Europe. "We are looking for businesses that are established but have not yet scaled. we're looking for businesses led by a management team, at least a core management team that has a strong track record."

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Europe's Tier-Two Data Center Markets Look Increasingly Attractive: DTCP

Cool Vector

Europe's Tier-Two Data Center Markets Look Increasingly Attractive: DTCP