The explosive demand for hyperscale and AI is clashing with severe supply constraints, reshaping market negotiations globally and in Spain’s data center colocation landscape.
The wholesale colocation market has entered an unprecedented phase in 2025, with bargaining power decisively shifting toward providers as demand dramatically outpaces supply in key global markets, especially in Spain. After years of relatively balanced negotiations, data center operators now hold the advantage in deal-making, commanding premium prices and favorable terms that would have been unthinkable just 24 months ago.
Spain is establishing itself as an emerging powerhouse in Europe’s data center scene. Madrid leads with 26 data centers, solidifying its role as a hub for connected digital infrastructure and attracting major investments from tech and colocation service companies. Barcelona follows closely with 8 centers.
The growth is explosive: with an operational capacity of 177 MW and projected growth up to 361 MW, Madrid is becoming a focal point for hyperscalers and colocations. Recent trends highlight the rapid evolution: in 2024, Madrid reached 194.5 MW of installed power, a 32.31% increase over the previous year.
Madrid’s advantages include its connectivity, land availability, and a substantial supply of renewable energy, though it faces challenges due to “inadequate energy transport infrastructure” and limited land and energy resources, particularly in central areas.
In 2025, the wholesale colocation market has swung heavily in favor of vendors, with wholesale rates in Northern Virginia rising 12-18% since January 2025, Singapore rates increasing 20% year-over-year driven by land shortages and sustainability requirements, and Frankfurt maintaining record occupancy rates despite energy restrictions. The average monthly rate for a requirement of 250 to 500 kW in primary markets hit a record $184.06 per kW/month, up 12.6% year-over-year.
The global weighted average vacancy rate for data centers dropped 2.1 percentage points year-over-year in Q1 2025 to 6.6%, with Paris leading the adjustment as vacancy declined to 7.7% from 16.1%. In North America’s primary markets, overall vacancy hit a historic low of 1.9% at the end of 2024.
This scarcity is driving unprecedented market dynamics. Net absorption in the top four North American markets grew by 101% year-over-year in Q1, totaling 1,668.5 MW, fueled by continued strong demand in Northern Virginia and increased activity in Phoenix and Atlanta.
From Stackscale’s Spanish perspective, co-founder and VP of Sales & Marketing David Carrero notes: “Spain has a historic opportunity to become Southern Europe’s interconnection hub.” With over two decades of experience in the tech sector, including founding Ferca Networks and working at Acens and Telefónica, Carrero highlights Spain’s rapid growth surpassing global trends. “The combination of advantageous geography, a favorable regulatory framework, and especially access to competitively priced renewable energy is attracting investments that traditionally went to markets like Frankfurt, London, Amsterdam, and Paris.”
Stackscale, with data centers including Equinix MD2 and Interxion MAD3 in Madrid, along with infrastructure within Grupo Aire, has witnessed this transformation firsthand. “We’ve seen demand for our private cloud and bare-metal services multiply, particularly for large-scale AI and private generative AI use cases with solutions like PrivateGPT,” Carrero adds.
A key driver is the AI revolution, with Gartner estimating global AI infrastructure spending exceeding $300 billion in 2025, led by hyperscalers like AWS, Google Cloud, Microsoft Azure, Oracle, and Meta. Generative AI training clusters routinely consume 40-80 kW per rack—a power overage unsustainable in traditional air-cooled halls. Carrero explains: “We’ve reached a point where continue inflating air conditioning systems makes no sense. It’s like trying to cool an open oven with a household fan. Basic physics set limits.” This is fueling widespread adoption of liquid cooling for large AI solutions.
Spain’s ambitious investments are outlined in the Data Center Sector Report 2025-2027 by Spain DC, which anticipates €58 billion flowing into the sector by 2030. Microsoft plans to quadruple AI and infrastructure investments in Spain between 2024 and 2025, totaling around $2.1 billion.
Regional dynamics in Spain show a significant reshuffle: Barcelona now accounts for 18.5% of the market (up from 14.4% in 2023), and Aragón holds 10.7%, thanks to new colocations and hyperscale projects. Carrero comments: “Aragón is especially interesting—Microsoft announced a new data center campus in Villamayor de Gállego, positioning the region as a serious player nationally. Projections suggest Aragón will grow to nearly 340 MW, overtaking Barcelona as the second-largest region for data centers.”
The Spanish colocation scene features both international giants like Equinix, Prime Data Centers, Data4, and CyrusOne, and local-focused companies. Major developments include Data4’s new 80 MW site in San Agustín del Guadalix, Equinix’s MD5 data center with 8.5 MW in Madrid, and DAMAC’s Edgnex project of 40 MW in Vicálvaro, Madrid.
In this vendor-dominated environment, strategic buyers are adopting new tactics, such as diversifying geographically—Carrero notes: “Our most savvy clients are exploring secondary locations like Málaga, Lisbon, the Canary Islands, Amsterdam, Valencia, Alicante, or even Barcelona, instead of concentrating solely on Madrid.” Key strategies include negotiating energy terms separately, considering partial build-to-suit deployments when immediate availability is limited, and monitoring emerging markets for better economic conditions.
Looking to the future, Carrero emphasizes: “A trend we see especially in the corporate sector is moving toward private generative AI. Companies in regulated industries like banking, healthcare, and public administration cannot risk their data leaving their perimeter. That’s where solutions like PrivateGPT on dedicated infrastructure become crucial.” Stackscale offers tailored configurations, such as dedicated nodes optimized for AI, with NVIDIA L40S, L4, or Tesla T4 GPUs, high-speed networking, and NVMe storage, with minimum specs including at least 8 CPU cores, 32 GB of RAM (preferably 128 GB for enterprise deployments), and GPUs with at least 24 GB of dedicated memory.
Industry experts predict that the current vendor’s market won’t last forever. Price pressures are expected to recede around 2027 as new supply enters the market and hyperscalers expand their own capacity. However, several factors could prolong vendor dominance: ongoing AI growth, limitations of the electrical grid requiring high-voltage transmission projects constrained by permits and zoning, and increasingly restrictive data sovereignty regulations expanding opportunities for colocation providers.
Spain’s regulatory framework shows awareness of data center strategic importance. The Spanish government recognizes this with initiatives like the ‘Singular Interest Project’ (PSI), aimed at fast-tracking large projects. Yet, challenges remain: insufficient infrastructure investment threatens to limit new entrants, prompting Spain DC to petition Ribera for €6 billion annual investments until 2030.
Spain’s commitment to sustainability also plays a vital role. Carrero highlights: “European clients massively value the ability to run workloads on 100% renewable energy.” With abundant solar and wind resources, Spain offers natural advantages. Energy prices also make the country attractive, as reflected in PPAs data showing Amazon as a primary buyer in renewable energy projects.
In conclusion, for 2025 and likely through 2026, data center colocation remains largely a seller’s market across Tier 1 regions, including Spain. Providers currently hold the advantage, but strategic buyers who plan early, diversify deployments, and negotiate favorable terms will navigate the turbulence—and perhaps even capitalize on it. Carrero emphasizes: “What we’re experiencing isn’t just a temporary shift; it’s a fundamental redefinition of how the industry operates. Companies controlling physical data center capacity possess assets becoming increasingly valuable in the digital economy.”
Madrid remains the ninth-largest data center market in Europe, outpacing Frankfurt, London, and Amsterdam in growth rates. Projections indicate Madrid could reach 1,105 MW by 2030, positioning Spain as a serious contender in the European scene—not just regionally but globally. The current market dynamics reflect broader themes in business technology: the growing significance of physical infrastructure in a digital world and the premium commanded by scarcity. For buyers and sellers alike, understanding these shifts is not just useful—it’s essential for strategic success.
The evolution of the data center colocation market in 2025 represents more than a technical change; it’s a reflection of Spain redefining its role in European and global digital infrastructure.