UKREiiF Report: Data centres and logistics developments – perfect partners for growth?

The SectorScope editor Karen Fletcher reports from UKREiiF 2025 on how the industry is tackling the challenges of rapid data centre growth in the UK.

At UKREiiF 2025, the UK’s growing data centre market was under the microscope from all sides. One of the critical questions is how can construction and property professionals deliver the necessary building infrastructure to meet growing demand and deliver the government’s vision of an AI future for the UK?

One panel discussion, hosted by Winvic, cut through some of the key issues in the market while highlighting that construction skills from the logistics sector can support data centre expansion to create long term value.

The panel

Rebecca Evans (Chair)	Head of Infrastructure, ING Media
Danny Cross	Director Strategic Lead and New Business, Winvic
Rennie Dalrymple	Partner, Ridge & Partners
David Ribbands	Director, Development Management, Prologis
Angela Schembri	Senior Director, Planning, Tetra Tech
Michael Umfreville	Head of Data Centres, BNP Paribas Real Estate

Winvic has already stepped confidently from the industrial and logistics (I&L) sector into data centre development, as Danny Cross, Winvic’s Director Strategic Lead and New Business pointed out. “Our experience in delivering logistics buildings at speed, and our solid supply chain means that we can bring that capability to the data centre market.”

David Ribbands, Director Development Management for Prologis, which is also working in both I&L and data centres, agreed: “We are always going to have a core industrial and logistics offering, with data centres emerging along with life sciences. Our strength is that we can apply learning across the sectors.”

For data centres in the UK, lack of construction expertise is not the problem. Rennie Dalrymple, Partner at built environment consultancy Ridge & Partners noted: “Data centre demand is outstripping supply. There are a lot of opportunities for new entrants, but the constraints are suitable land and access to power.”

One of the key issues is that even if land is available for a data centre, it can take years to achieve the necessary grid connections. Here, the overlap between logistics and data centres can be helpful.

Michael Umfreville, Head of Data Centres for Bank Paribas Real Estate, explained: “There is a huge restriction on power in London, for example. If we can work with an I&L developer to source space on the site until power arrives in ten years, then that’s a good step.”

Data centres have been identified as 'critical infrastructure' by the UK government

But the rise of data centres, and their client spending power, can cause friction in the market: “Data centres are swallowing power in key growth areas, pushing out industrial and logistics projects as they can’t compete on price,” said Ribbands. “As the data centre market booms it’s a real challenge to meet the needs of both.”

The issue of power accessibility is one that presents the most significant barrier to timely data centre growth in the UK. Rennie Dalyrmple summarised: “AI zones should be where they can readily release power. The UK has enough power, but it doesn’t get around very well.”

Current solutions include helping developers and clients reduce their power requirements through good design or adding on-site power which comes with its own set of challenges. For example, an on-site gas generator adds to capital costs as well as further complicating planning approvals.

Renewables, such as roof-mounted solar, are also an option, but as Michael Umfreville noted that access to a robust power source is critical for data centre clients: “Operators are looking at alternatives to the power grid, but they really prefer to be on the grid.”

Data centre developers are open to on-site energy, but prefer grid connections

Angela Schembri, Senior Director, Planning, Tetra Tech highlighted another hurdle in making a switch between logistics and data centres: “While they’re similar and they are both type B8 developments, I&L and data centres are different types of building in terms of how planners view them with different benefits.” She pointed out that data centres are ‘good neighbours’ in terms of low traffic, for example.

Rennie Dalrymple highlighted why planning delays are so problematic for the data centre sector: “It takes two years to get planning consent; then two to three years to get to first phase. That’s the length of a parliament. Labour is making noises on the digital economy, but we need to join power, fibre and policy together.”

Angela Schembri noted the problem that while the government has declared data centres to be ‘critical infrastructure,’ the practical policy support is lacking. “Local policy does not necessarily follow national policy. Government says data centres are important, but we need a firm policy on principle and need.

One site for data centres and warehousing?

“A lot of the time when working with Local Authorities on a data centre project, we have to start from scratch. A clear, strategic policy framework, a national policy statement, would be ideal.”

Despite these challenges, the construction and property sector regard data centres as a key growth area for the next decade and beyond. The expertise that’s already inherent in the industrial and logistics sector has enabled developments to move forward swiftly once the right location is found.

In terms of growth areas, the panel agreed that London is already under a lot of pressure in terms of both land and power availability. Michale Umfreville pointed to the area around the M1 up to Milton Keynes and west along the M4.

David Ribbands added that Tier 1 areas are becoming power-scarce so ‘Tier 2’ locations such as Manchester and the wider Northwest along with Cardiff are areas of interest.

But timing is critical. The data centre market is global, with clients able to make a choice of several European countries for their projects – competition for investment is growing. For example, France has recently been making a bid to attract more AI data centre developers with its ‘Choose France’ campaign.

And Germany, already second in the European data centre market after the UK, is forging ahead with data centre growth plans. As Rennie Dalrymple noted: “Frankfurt is better than the UK at integrating data centres into local communities. In the last twelve months this has been a priority in Germany.”

The industry is ready, but it’s clear that the government has to put some more regulatory support behind its AI goals or developers may find that opportunities are slipping away to our better-prepared European neighbours.