This has nothing to do with the catwalks. Milan has a lot to offer firms seeking to increase their data centre capacity.
Europe’s largest data centre markets – the so-called “FLAP-D” cities of Frankfurt, London, Amsterdam, Paris, and Dublin – have long enjoyed advantages, including infrastructure, connectivity, and availability of labour.
But this leadership has come at a price.
For some, there are cracks in energy supply. Dublin has suspended new data centre approvals in congested areas. Frankfurt still depends heavily on fossil fuels. Securing multi-year power purchase agreements (PPAs) has become tougher, with increased risk from abrupt price spikes.
The regulatory landscape is also thorny.
The EU’s Taxonomy for Sustainable Activities adds layers of scrutiny. Operators in FLAP-D hubs must adopt water-saving and low-carbon construction methods, or risk project delays and extra costs.
The high cost and low availability of skilled labour in hotspots such as London and Frankfurt pose further challenges.
Milan doesn’t have many of these pressures. It benefits from government incentives, fast-growing sources of renewable power, and comparatively lower operational outlays.
Estimates suggest that Italy’s data centre market could nearly double to $6.2bn by 2030.
Why Milan?
Milan is no longer viewed as a second-tier real estate market, in part owing to the advantages it presents for those looking to establish data centres.
Here are five.
First, there’s lots of renewable energy. Lombardy produces substantial hydroelectric and solar energy , helping investors reduce carbon output and manage ESG commitments. Lombardy has set up a €200m fund to support green technology acquisitions.
Second, Milan fosters stable pricing and likes PPAs. It provides clear pathways for fixed-rate PPAs with its Air and Climate Plan. Also, its smaller market avoids the intense bidding wars that ramp up costs elsewhere.
Third, Milan helps you meet EU sustainability rules with less turbulence. The city’s robust renewable renewable approach makes compliance with EU environmental benchmarks easier. Local initiatives support heat recovery, water conservation, and low-carbon construction. This helps future-proof your project.
Fourth, you can find skilled labour at competitive costs. Italy’s labour costs are set to rise by 2% in 2025, lower than the 4.6% forecast for the euro area. Collaborating with local educational facilities can create a pipeline of trained staff, lowering reliance on pricey external contractors.
And fifth, the city’s real estate is more affordable than FLAP-D sites, and brownfield redevelopment is encouraged. That’s one reason Milan’s data centre capacity grew by 34% in 2024, outperforming emerging hubs such as Madrid and Warsaw.
Some practical considerations
There are several practical considerations that operators and investors looking to capitalise on this opportunity should bear in mind.
The first is site selection. This is key to meeting project goals, including resilience and growth potential. Teams need to make sure that the chosen site has a reliable energy and renewable network. This will reduce downtime and costs and help ensure compliance with sustainability legislation.
Another consideration is partnerships. Working with local partners with specialist knowledge can help unlock local public sector grants, tax credits and other incentives.
It is also helpful to be open to new approaches and ideas. This is particularly true when it comes to sourcing skilled people. Looking at suppliers with experience in adjacent fields can help overcome skills shortages.
Finally, being flexible from the outset will help operators and investors manage the inevitable pinch points of a project and build in longer-term scalability.
Richard Battey is Director and UK data centre lead at Currie & BrownFurther Reading:
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