The Europe Data Center Construction Market is projected to grow from USD 16.32 billion in 2024 to USD 27.87 billion by 2033, reflecting a compound annual growth rate (CAGR) of 6.13% over the forecast period. This expansion is fueled by accelerating digital transformation, widespread cloud adoption, and increasing emphasis on sustainability and energy efficiency across the region. Digital transformation across industries such as healthcare, finance, retail, and government is driving demand for scalable, secure, and high-performance data infrastructure. The rise of AI, IoT, big data analytics, and e-governance initiatives has intensified the need for advanced data center facilities capable of managing vast volumes of real-time data. As enterprises migrate workloads to hybrid and multi-cloud environments, both hyperscale and colocation data centers are experiencing robust demand. Sustainability has emerged as a central theme in the European data center landscape. Stringent EU regulations aimed at achieving carbon neutrality are compelling operators to adopt green building practices. This includes integrating renewable energy sources such as wind and hydropower—particularly in Germany, France, and Nordic countries—implementing energy-efficient cooling systems, and pursuing certifications like LEED. Modular and prefabricated construction methods are gaining traction due to their reduced environmental impact, shorter deployment times, and lower resource consumption. These innovations not only support regulatory compliance but also reduce long-term operational costs and enhance competitiveness. Hyperscale data centers are seeing significant investment, with global providers committing over EUR 50 billion in new European projects in 2024 alone. Colocation facilities are also expanding, offering enterprises flexible, secure, and cost-effective alternatives to in-house infrastructure. Major hubs such as Frankfurt, Paris, London, and Amsterdam remain attractive due to strong connectivity, mature ecosystems, and high interconnection density. However, grid constraints in these traditional centers are shifting development toward secondary cities with better access to renewable energy and faster permitting processes. Despite strong growth, the market faces challenges. High capital expenditures for land, advanced cooling, energy efficiency, and compliance with environmental standards continue to burden operators. Rising electricity prices and supply chain volatility further increase financial risks. Smaller players often struggle to compete with well-funded hyperscalers. Regulatory complexity remains a significant hurdle. Operators must navigate diverse national regulations, GDPR compliance, environmental clearances, and energy supply approvals, which can delay project timelines and increase costs. Regional differences in legal frameworks require specialized expertise and close coordination with local authorities. Nonetheless, growing institutional interest is evident. A EUR 720 million asset-backed securitization highlights increasing confidence in data center real estate as a stable investment. With 58% of global operators reporting labor shortages, modular construction techniques that cut deployment times to just six months are becoming increasingly popular. In summary, Europe’s data center construction market is poised for sustained growth, driven by digitalization, cloud expansion, and sustainability imperatives. While challenges around cost, regulation, and labor persist, strategic investments, innovative construction models, and strong policy support are enabling the region to build a resilient, future-ready data infrastructure.