Beyond FLAP-D: Why Europe’s next wave markets are moving centre stage

08 April 2026 – Article by Capacity Media

For years, Europe’s data centre industry has revolved around a familiar cluster of cities. Frankfurt, London, Amsterdam, Paris and Dublin: the so-called FLAP-D markets have attracted the lion’s share of investment, infrastructure and operator attention.

But the tide is turning. Emerging hubs such as Hamburg, Lisbon and Vienna are drawing serious interest, and for Tesh Durvasula, CEO of AtlasEdge, that shift is not a trend; it is a structural change.

“Growth does not stop; it finds the next place it can happen,” he says. “These markets are not simply absorbing overflow; they are becoming strategic in their own right.”

The pressure building in established hubs

The constraints now facing FLAP-D markets are, in many respects, a consequence of their own success. Labour costs have risen, competition is fierce, and, in some cities, development has become significantly more complex and expensive than even a few years ago. At the same time, improved fibre connectivity has made it possible to build further afield without sacrificing performance.

“This is not about moving away from major hubs,” Durvasula is careful to note. “Those markets will remain essential. But they can no longer absorb all future demand. The next wave of markets is no longer optional; it is becoming central to how the industry grows.”

Underpinning this shift is the changing nature of AI workloads. As the industry moves from training large language models in centralised clusters towards running inference at scale, the need to process data closer to end users becomes more acute. That, says Durvasula, naturally pushes development into a wider pool of cities.

Finding the right markets early

AtlasEdge has positioned itself as an early mover in several of these emerging European locations. The company’s investment strategy is built around identifying markets with strong long-term fundamentals before they become constrained, prioritising economic strength, customer demand, supportive infrastructure and genuine room to scale.

Germany is a case in point. While Frankfurt remains dominant, Durvasula sees significant opportunity in cities such as Hamburg, Munich, Berlin, Düsseldorf and Stuttgart, each with distinct industrial strengths and regional demand spanning manufacturing, automotive, enterprise IT and the public sector.

“We focus on markets where we can grow alongside customers, not just deploy capacity into saturated environments,” he explains. “It’s about building long-term positions in markets that will matter for a long time to come.”

Power, land and the regulatory picture

Next wave markets also tend to offer greater flexibility on the practical fundamentals. Power and land are often more accessible, and local authorities in many of these cities have shown a stronger appetite to support digital infrastructure development.

AtlasEdge recently launched LIS001, the first data centre on its 30MW Lisbon campus. Portugal’s subsea cable connectivity and leading position in renewable energy made it, says Durvasula, a natural fit. But he is quick to caution against complacency: “These advantages do not remove the need for discipline. Success still depends on careful planning, strong local partnerships and responsible execution.”

Sovereignty, latency and the distributed future

Data sovereignty is increasingly shaping where infrastructure gets built. Customers, particularly in government, defence and other regulated sectors, want greater control over where their data sits and how it is handled. That appetite for a more distributed footprint, supporting compliance, reducing latency and improving resilience, is accelerating the move away from a handful of core hubs.

Hyperscalers, Durvasula notes, are already building vendor and geographic diversity into their strategies, which naturally drives investment into a broader set of markets.

The long view

Looking ahead, Durvasula is bullish. Demand is strong, technology is evolving quickly, and the market continues to expand. For AtlasEdge, the focus remains on next-wave cities where it can grow capacity over time, thinking five to ten years out, rather than chasing near-term demand.

“The opportunity in front of us is immense,” he says. “Those that take a long-term view, and act early, will be best placed to capture it.”

This article was first published in Capacity. Read the original article here.