Executive Summary

• VP of Business Development EMEA at VIRTUS Data Centres, Christina Mertens, sat down to talk with DCi about how tier 2 locations are key to industry growth and their key learnings from the Wustermark mega green data centre campus.
• One of the biggest takeaways from developing the Wustermark campus has been just how critical early grid partnerships are.
• Tier two locations are stepping up to become the main drivers of new data centre capacity in Europe. As the primary FLAP-D hubs continue to become more saturated and constrained, most of the fresh growth is going to flow into these secondary markets.

 

With the rapid evolution of the data centre industry, tier 2 locations are becoming more attractive to operators. Christina Mertens, Vice President of Business Development, EMEA, at VIRTUS Data Centres, sat down with Chief Editor, Lauren Raybould, to discuss what tier 2 locations are, why they’re attractive, the key impacts it has on economic growth and the impact on local businesses and communities.

1. How is the data centre market evolving as growth increasingly moves beyond major metropolitan areas?

The data centre market in Europe is undergoing a profound evolution, driven by surging demand from AI, cloud computing, high-performance computing, and digital services that far exceed earlier projections. Traditional tier one locations – Frankfurt, London, Amsterdam, Paris (FLAP) – remain vital but are increasingly constrained by power grid limitations, scarce and expensive land, extended planning timelines, and regulatory hurdles.

As a result, growth is decentralising toward tier two locations, which offer greater scalability, abundant power (often renewable), cost advantages, and supportive policy environments. Analysts project Europe’s installed capacity to more than double from ~24 GW in 2025 to around 55 GW by 2030, with secondary markets e.g., Berlin, Milan, Madrid, Warsaw growing fastest and capturing a rising share of new builds – around 43% in 2025 according to CBRE data.

This shift marks a move from concentrated urban cores to distributed, mega-scale campuses in regional corridors, enabling sustainable long-term expansion to meet Europe’s data centre needs.

2. Why are operators increasingly looking beyond traditional metro locations?

The tier 1 locations are facing some serious limitations. Power is a major one. Grid headroom is constrained in those cities, meaning there’s not enough spare capacity on the electricity network to easily add the massive loads that modern data centres require to operate. Land is getting scarce and expensive, planning approvals can take years, and there are tighter environmental rules making things even trickier.

At the same time, demand – especially from AI – is exploding. These workloads don’t just require power; they need it in large, predictable amounts, plus advanced cooling systems to handle the heat from all those high-density servers. In dense urban cores, it’s a challenge to deliver that without constant compromises or delays. That’s why operators are increasingly in search of alternative locations – sites that can cater for mega-campuses.

3. What structural factors are making non-metro locations more viable today than they were in the past?

A lot has changed to make tier two locations much more practical than they used to be. For starters, Europe’s fibre networks have expanded hugely, along with new sub-sea cables, so latency isn’t the barrier it once was – you can get direct, high-speed global connectivity without being in a FLAP hub.

On the power side, renewables are much better integrated and grids are getting modernised. This means tier two locations often have more abundant, sustainable energy available without the same bottlenecks as in dense cities.

There’s also simply more physical space. Larger land parcels let operators build on-site substations, plan multi-phase infrastructure, and create those efficient mega-campuses where everything – energy sharing, advanced cooling systems – works together seamlessly and can scale up over time.

Add in supportive policies, like national digital strategies and incentives in various countries, plus real economic wins – land and power can be 30-60% cheaper in many secondary markets compared to the core hubs – and it all aligns with the massive demand surge we’re seeing from AI and everything else.

The bottom line is these advances in connectivity, energy, design, and economics have flipped the script, turning regional locations into smart, viable choices rather than compromises.

4. How does the industry define a “tier two” data centre location?

Tier two locations are emerging or regional markets beyond primary FLAP-D hubs, such as Berlin, Milan, Madrid, Warsaw, Zurich, or areas in the Nordics and Iberia. They feature strong but less saturated infrastructure, offering power, land, and connectivity for large-scale development while maintaining proximity to demand centres.

5. What key factors make a tier two location attractive to operators?

What really makes tier two locations stand out to operators is how they tick so many practical boxes at once. Firstly, power is a critical requirement, which will define what could be a suitable location. There’s often much more reliable availability, especially when it comes to renewables, and crucially, enough space to build dedicated substations right on site. That means your predictable, large-scale megawatt allocations that AI and high-density workloads absolutely demand can be secured, without waiting years for grid upgrades in a crowded city.

Then there’s the land itself. These locations usually have more affordable, expansive plots where multi-building campuses can be built. That allows for smart, integrated

designs such as shared energy systems, advanced cooling setups, room to grow in phases, and even features like heat recovery that make sustainability goals easier to hit.

Connectivity has caught up dramatically too. Robust fibre networks deliver low-latency links straight into global routes and planning tends to move faster, often backed by supportive national policies like recovery plans or digital strategies that treat data centre infrastructure as a priority rather than an afterthought.

Put it all together, and these locations aren’t just backups – they’re genuinely well-suited for the next wave of hyperscale, AI-driven development, giving operators the certainty, flexibility, and efficiency they need right now.

6. What impact does a multi-data centre campus have on the local economy?

These multi-data centre campuses can generate significant economic value for the local area. They attract substantial capital investment – sometimes billions of euros – which drives a strong construction phase and contributes to sustained tax revenue over many years.

Beyond direct spending, the development creates broader economic multipliers. Independent studies, such as PwC analysis, indicate that each permanent job at the data centre typically supports six or more additional roles in the wider economy through indirect and induced effects.

The campuses also serve as long-term anchors for regional growth. They strengthen local supply chains, encourage skills development through partnerships with education providers, and support infrastructure improvements.

7. What types of jobs are created during construction and once the campus is operational?

The construction phase of a large data centre campus can bring thousands of temporary jobs to the local area. These roles cover a wide range of skills – engineers, electricians, mechanical tradespeople, project managers, logistics teams, and various specialist contractors. On phased mega-campuses especially, that work can stretch over several years, bringing a real boost to employment while the site is being built out.

Once everything is up and running, the picture shifts to a smaller but highly skilled permanent workforce. These are the people who keep the facility live 24/7: operations technicians, engineers, security specialists, maintenance teams, IT support staff, and management. Their focus is on maintaining reliability, driving operational efficiency, and making sure the site meets increasingly strict sustainability standards.

8. How do data centre developments benefit local businesses and communities?

These developments can really help local businesses and communities in tangible ways. They create ongoing demand for local suppliers such as tradespeople, catering companies, transport firms and professional services.

Many operators also build connections with local colleges, universities, and training programmes, helping to create clear skills pathways and career opportunities in digital infrastructure and related fields.

Then there are the added community benefits that come with thoughtful design. Things like waste heat reuse can sometimes be used to power district heating systems or support other local projects, turning what might otherwise be excess energy into something useful for nearby homes or businesses.

All of this makes the region more attractive for future tech investment. It builds a stronger, more resilient local economy that isn’t just relying on one sector.

9. What are the biggest challenges when developing data centres outside major metros?

Firstly, power can be a challenge. Securing grid capacity and getting the necessary upgrades in place can involve long lead times – sometimes years.

Secondly, planning isn’t always straightforward. Rules and timelines can vary from one region to another, so what works smoothly in one place might move much more slowly in another. Local frameworks need to be navigated carefully.

Thirdly, skills can be less available in tier two locations. In newer or less developed areas for data centres, there isn’t always a deep pool of experienced people ready to step in for construction or operations. Building those skilled teams – through training, recruitment, or bringing in specialists – takes effort and planning.

Logistics can also be trickier than in tier one hubs. Getting large, specialised equipment to site – transformers, generators, cooling systems – means dealing with more rural or regional transport routes, which can add complexity.

Finally environmental expectations keep rising. New sites have to meet tough regulatory standards around energy efficiency, waste heat recovery, transparent reporting, and overall sustainability right from the design stage.

Success really depends on building solid relationships with grid operators, local authorities, regulators, and the community early on.

10. What misconceptions exist about non-metro data centre sites?

Tier two locations can be seen as temporary “overflow” rather than strategic anchors. It is often assumed that the offer inferior connectivity/reliability, despite fibre advances, and can viewed as low-impact economically (ignoring multipliers and taxes). Another misconception is that they aren’t environmentally friendly, which overlooks sustainable designs like renewables and waste heat reuse. And some believe they lack demand for employee skills, when many now support hyperscale/AI and assumptions are made that AI automation will replace jobs.

A lot of these outdated assumptions come from how things were five or ten years ago. Today’s reality is very different. Tier two locations are increasingly the smart, forward-thinking choice, not the fallback.

11. How does VIRTUS mitigate risk when expanding into new regions?

VIRTUS employs strategic site selection in high-growth markets. We prioritise Tier III standards for resilience, focus on 100% renewable/carbon-zero power, incorporates sustainable innovations (e.g., heat recovery), build phased campuses for scalability, and fosters partnerships (e.g., with grid operators like 50Hertz in Germany for substations).

We have over a decade of experience in designing, building and operating data centres which helps us to achieve operational excellence and regulatory alignment.

12. Why did VIRTUS choose Wustermark as a location for this campus?

Many reasons really – most of which define a top tier two location. Wustermark offers vast land (>350,000 m²) for a mega-campus, proximity to Berlin’s growing enterprise/digital ecosystem, access to sustainable/renewable power (adjacent to wind farms, large substation via the 50Hertz partnership), excellent transport links (rail/motorways), and alignment with Germany’s digital/energy policies. All of which mean that we can provide the highest quality, modern facility for hyperscale, cloud, AI, and enterprise customers.

13. What have been the key learnings from developing the Wustermark campus?

One of the biggest takeaways from developing the Wustermark campus has been just how critical early grid partnerships are. For example, signing the Anschlusserrichtungsvertrag with 50Hertz – the agreement to build what will be Germany’s largest substation directly for the site – gave us the certainty we needed on renewable integration and long-term power capacity right from the start.

And choosing a location with strong renewable resources nearby has helped us push toward net-zero targets. It’s also opening up real opportunities for community integration. The potential to reuse waste heat for local district heating, for instance, turns what could be a drawback into a benefit for the surrounding area.

Overall, these elements – early partnerships, thoughtful sustainable design, phased rollout, and strategic site selection – have shown us what’s possible when you plan with the long term and the local community in mind.

14. What does Wustermark tell us about the future of data centre development in Europe?

It exemplifies the shift to large, green mega-campuses in tier two regions near major cities, powered by renewables, integrated with local grids, and designed for AI/cloud scale. Wustermark sets a benchmark for sustainable, resilient infrastructure through innovation, partnerships, and policy alignment, signalling Europe’s move toward decentralised, eco-efficient footprints that balance growth with environmental and community needs.

15. How do you see the role of tier two locations evolving over the next five to ten years?

I really see tier two locations stepping up to become the main drivers of new data centre capacity in Europe. As the primary FLAP-D hubs continue to become more saturated and constrained, most of the fresh growth is going to flow into these secondary markets.

Tier two locations will play a huge role in making Europe’s digital infrastructure more resilient overall. They’ll help power the continent’s AI ambitions without overloading the old core cities, and they’ll spread the economic benefits much more evenly – creating jobs, investment, and growth in places that haven’t always been at the centre of the tech map.

This is an exciting shift, and it feels like the future is already taking shape in these regional corridors.