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Arun Shenoy, CMO at Serverfarm and Carole Santens, managing director Belgium Digital Infrastructure Association (BDIA), will be part of a panel discussing the key drivers behind the ‘The Rise of Tier 2 Markets in Europe’ at Kickstart Europe 2025.
The session focuses on tier 2 data center market dynamics, the effects of regulations, and how power and land availability are influencing market shifts.
The AI Factor: Reshaping Data Center Requirements
As AI evolves from machine learning to generative AI, the growing demand for distributed infrastructure could significantly reshape both the location and design of data centers. Already, hyperscalers deploying “AI-ready” strategies are seeking out significant power and land availability which is opening the door to new market opportunities.
“The tier 1 markets are dominated by construction schedules and capacity driven by pre-lets primarily for single tenant deployments. A symptom of this is customers who have time-to-market sub-10MW requirements struggle to find suitable, near-term capacity; this makes for compelling opportunities for Serverfarm in both key tier 1 and 2 markets. Tier 2 markets are also about a combination of the local and often sovereign demand and the potential overflow for tier 1 requirements.
What happens with AI production workloads that need to become much more distributed in nature? What impact does that have on tier 2 markets and for more distributed infrastructure deployments in tier 1 markets. For example, does London become a bigger market to the extent it goes as far as Bristol, Birmingham or the south coast,” says Shenoy.
Defining Tier 2 Markets: A Complex but Crucial Conversation
A key topic is data centers on the elusive definition of tier 2 markets. Unlike tier 1 markets, such as FLAP-D (Frankfurt, London, Amsterdam, Paris, Dublin), tier 2 markets span the Nordics, Milan, Munich, Berlin, Madrid, and Northern England and lack a clear industry standard.
Another aspect will be the transition between tiers—how and when a market such as Milan might transform from tier 2 to tier 1 which attracts more colocation data centers.
Challenges in Tier 2 Markets: Educating and Expanding
Navigating these markets through educating local authorities that lack familiarity with data center challenges such as misaligned zone requirements.
Additionally, the panelists will discuss the balancing act that hyperscalers must adapt when expanding into these markets to establish a broad presence and the economics of smaller deployments in new regions and markets with limited infrastructure.
Market Evolution: Trends Driving Change
A significant trend influencing data center markets is regionalization. Smaller cities are experiencing increased demand as hyperscalers and colocation providers target regional customers. This movement is hindered by power and land availability both of which often drive hyperscalers toward less saturated markets.
The panelists will explore the potential for tier 3 markets to graduate to tier 2 status, and for tier 2 markets to become tier 1. This progression highlights the dynamic nature of data center growth and investment.
Amsterdam Case Study: Regulation and Growth
Amsterdam was a hub for data center activity which has faced challenges from regulatory uncertainty and capacity availability. The panel will analyze Amsterdam’s journey to offer lessons for other markets balancing regulatory constraints with growth opportunities.
“In terms of the investment attractiveness of a particular market, the learning for tier 2 markets and the surrounding ecosystem of governments and local authority regulatory frameworks can be found in places like Dublin and Amsterdam,” says Shenoy.
The Rise of Tier 2 Data Center Markets: Europe’s Next Hotspots is on February 5th at 15.25 in the RAI Amsterdam.
The session will provide insights and perspectives through defining tier 2 markets, exploring market challenges, and examining the evolution of regional trends
Serverfarm is a unique data center company whose mission is to maximize data center and IT infrastructure efficiencies for service providers including communication, application, cloud and internal enterprise IT organizations
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