New £1bn west London data centre set to back soaring AI demand
Segro and Pure Data Centres have announced a new £1bn data centre located in London’s Park Royal, set to meet the soaring demand for digital infrastructure in the UK.
The centre, backed by secretary Peter Kyle, is set for completion in 2026, with operations expected from 2029.
The project will support next-generation AI and cloud computing services with its 56MW fitted facility, as the government positions the UK as a trailblazer in AI.
Kyle said: “Private investment like this innovative partnership between Segro and Pure DC will help ensure the UK has the digital infrastructure it needs to thrive, paving the way for a digital and AI-powered future.”
Russ Mould at AJ Bell noted the market’s reaction, saying that “Segro’s data centre joint ventures gives investors a different spin on the AI theme”, as the firm topped the FTSE risers list.
The project will offer lucrative returns, with an expected yield ranging from nine to ten per cent.
Powering AI amid infrastructure push
The Park Royal facility is part of an accelerating data centre construction push across Europe, due to the surging demand for high-performance computing power.
For the UK, the government’s AI action plan announced in January positioned AI at the heart of Rachel Reeves’ growth strategies.
Its AI white paper outlined a ‘pro innovation’ regulatory approach, which pledged to avoid heavy-handed rules in favour of attracting investment.
This investment, one of the largest of its kind in the UK, signals the private sector’s response to these ambitions, amid growing pressure to keep up with AI demand.
Capacity challenges
The demand for data centre capacity is soaring.
A recent Rider Levett Bucknall report found that operators anticipate to roll out 27MW of capacity this year, which is an almost 300 per cent uptick since 2023.
Yet, with supply chain challenges and sustainability effects, the UK faces additional hurdles. Land and power shortages have already caused delayed and restrictions in parts of the UK
The AI sector is facing a significant computing power shortage, and while projects like Park Royal data centre will help, they are arriving years behind the US and China, which have poured incomparably vast sums into AI-ready super-computing hubs.
Stephen Beard, head of data centres at Knight Frank, told Morning Wire there was a “disconnect” between the government’s AI ambitions and the ability to “secure timely grid connections”.
Grid capacity has fallen short in three of the past five years, as more than £100bn in investment is plugged into data centres each year.
What’s more, by the data centre’s expected operative date, the global race would have moved even further, perhaps leaving the UK playing catch up to secure its place at the forefront of the AI arms race.