Between climate change and the Web 3.0
As the transition to decentralized Web 3.0 continues, there are arguably few industries that can be as optimistic about the future as data center operators. It is not clear yet to what extent the metaverse and Web 3.0 will unfold, but the possibilities are simply unlimited and one thing is certain: the current trends are extremely resource-intensive. At the same time, however, this also leads to high climate burdens, and many cities are imposing ever stricter requirements on the construction of data centers in order not to miss their climate targets.
There is hardly any other European city in which this development is taking shape as severely as in Frankfurt. To date, Germany's fifth-largest city is already home to more than 100 data centers; alongside London, it is already one of the most important data center locations in the whole of Europe. Frankfurt has the highest growth rate in the data center sector in Europe and there is currently no sign of a turnaround. Each year, an average of 7 hectares of space is required in Frankfurt for the establishment of new data centers, and an investment volume of 400-500 million euros per year is expected in the coming years. However, this rapid growth also implies problems for the city in terms of building planning law. In order to counteract these at an early stage, the planning department, headed by Martin Hunscher, has now developed a concept for the systematic construction of data centers together with Mike Josef (SPD), member of the city council.
In September 2020, the magistrate of the city of Frankfurt announced a new urban development concept for the first time. The aim of the concept is the regulation of new data centers, as well as the optimized use of waste heat and the reduction of noise emissions. Future projects are to blend in better with the cityscape. At the same time, land for the construction of data centers should not be located at infrastructural nodes. Such land can be used more efficiently, for example for facilities with a high volume of employees and visitors. The intention is to deliberately use the development in a positive way and not to fundamentally prohibit the construction of new data centers, as was the case for a time in Amsterdam and Singapore. After all, the establishment of new data centers also creates numerous jobs and brings in high business tax revenues. The draft concept was completed at the end of 2021 and subsequently submitted to parliament by Frankfurt's department head of planning, housing and sports. It was specifically designed as a partial update of the previous commercial space development concept.
This raises the question of what exactly an urban development concept is and what actual legal implications it will have. In principle, urban development concepts are informal plans. They describe and justify the intended goals and measures, while at the same time presenting them in writing and in the form of technical drawings. In principle, such a concept has no legal binding force on the individual, but it serves the administration as a basis and orientation framework for its actions. The results are to be taken into account in the preparation of urban land-use plans, and an urban development concept can be made the basis for the provisions of a land-use plan.
Although the concept is not directly legally binding, it will have a significant impact on the structure of the Frankfurt data center market in terms of planning law. However, it may still take some time before the concept finally passes through the parliamentary process and the intended measures are implemented; concrete changes are not expected until next year at the earliest.
In a webinar, Michael Dada and Dr. Jan Linsin from CBRE, as well as Martin Hunscher from the Frankfurt City Planning Department and Lars Reubekeul from DLA Piper presented and discussed these aspects. You can find the recording below.
Following DLA Piper’s first Data Centre report published in 2019, we will be producing our next global report on "Investing in Data centres", which will be released later this year. The report will present findings from a wide sample of global data centre investors, developers and operators on key areas such as pricing and sustainability.
