One of the most exciting aspects of living and working in Germany is being a part of the major role the country plays in driving the global economy, thanks to its geographic location and economic significance. Germany is expected to produce $4.2 trillion in gross domestic product in 2019 and is the world’s fourth-largest economy following the U.S., China and Japan. Its success on the world stage can be tied to its robust economic growth and record low unemployment rates (3.8% in 2017). Germany is a mixed economy, allowing a free market while enforcing regulations to protect its citizens. As a member of the European Union (EU) it leverages the EU’s combined buying power with the euro and low interest rates, encouraging greater global investment in its economy.[i]
German markets are region-specific, rather than being centered around one major city. Companies do business locally, purchasing goods and services from predominantly regional suppliers. Equinix’s International Business Exchange™ (IBX®) data centers are business hubs for over 900 companies across nine facilities located in central (Frankfurt and Dusseldorf) and southern (Munich) Germany. Given this sizable footprint, we have doubled our revenues in the country over the last five years. Today, we are announcing the purchase of a facility in Hamburg (HH1) that will enable us to serve the digital business needs of businesses in the northern part of the country. This will expand our reach to a number of new customers – including many multinationals – in Germany’s already thriving financial services, manufacturing, transportation, gaming, healthcare and retail industries.
Our investment of $11M USD (€9M) to purchase the HH1 facility and $25M USD (€22M ) to redevelop the space is added to the more than $150M USD (€131M) investment that we made to enrich our Frankfurt IBX facilities in 2018. HH1 will add 130,000+ sq ft (12,000 square meters) to our global footprint, with 375 cabinets in phase one with the ability to expand to 1,875 cabinets at full build. The new site is planned to open in Q3 2019.
Hamburg: A center of international industry
The Hamburg metro area is the second largest city in Germany with a population of more than five million, and has a large concentration of multinational enterprises including large automotive and consumer packaged goods companies. Hamburg is known as Germany’s “industrial metropolis,” with the Port of Hamburg off the river Elbe fueling the region’s thriving production industry. Hamburg is Germany’s largest seaport and the third busiest container port in Europe (after Rotterdam and Antwerp), generating $25B (€21.8B) nationwide. A major transportation center, about 10,000 ocean-going ships arrive in the Port of Hamburg every year, more than 1,300 freight trains per week (more than 10% of all rail freight journeys in Germany start or finish there), and around 40,000 trucks drive into the Port of Hamburg every day.[ii]
As an international port, HH1 will make a strategic hub for submarine cable landing systems, such as our partner Eastern Light, which provides a gateway to subsea cable routes across Europe, and other providers’ with routes to APAC and the United States. Hamburg is also a leading trading port with China and Asia-Pacific companies, with more than 550 companies from China, 100 from Japan and 50 from Taiwan making Hamburg the German location with the largest Asian competence.[iii]
Hamburg metropolitan region generated a total GDP of $172B (€149.85) in 2016, making it the third biggest economic agglomeration in Germany. As a part of their digital transformation, regional and multinational enterprises increasingly require global interconnection with people, locations, clouds, data and things. The addition of Equinix HH1 will give our customers the opportunity to operate on a single, interconnected global platform to make these critical connections and process, store and distribute larger volumes of latency-sensitive data and applications at the digital edge, closer to end-users and local markets.
Germany: An interconnection hub for regional and global enterprises
Equinix Germany provides a centralized interconnection hub for many regional and multinational companies and diverse business ecosystems that are looking for an expanded global footprint and low-latency network connectivity to customers and supply chain partners. This includes local access in Germany to cloud and SaaS service providers via our Equinix Cloud Exchange Fabric™ (ECX Fabric™), such as AWS, Google and Salesforce. Hamburg-based Microsoft Azure customers can gain immediate access to the cloud platform via interconnectivity between HH1 and Equinix Amsterdam.
Equinix Germany is also the home to the world’s largest Internet exchange, DE-CIX Frankfurt, as well as the ECIX, NL-IX , KleyRex and DataIX Internet exchanges. Leading international companies in the financial services, commerce and automotive industries, as well as global enterprises seeking a presence in Europe’s largest national economy, can leverage proximate, private interconnection that maintains data security and regulatory compliance policies.
The Global Interconnection Index (the GXI), a market study published by Equinix, estimates that Frankfurt will have an Interconnection Bandwidth growth rate of 58%, which is the highest in Europe. Interconnection Bandwidth is the measurement of private and direct traffic exchange capacity between businesses. [iv] Frankfurt is also projected to have the second highest installed Interconnection Bandwidth capacity (373 Tbps) in Europe, following London (681 Tbps). This high growth of private Interconnection in Germany maps with the industry trends throughout Europe where a growing number of regulations requiring data compliance are serving as a catalyst of Interconnection growth. That, combined with the high economic growth and cross-border trade in Germany, makes direct and secure Interconnection a critical requirement for Germany’s ongoing success and contribution to the global economy.
Said Eric Schwartz, president, EMEA, Equinix, “The German economy continues to be a source of strength in Europe, and demand for interconnection continues to rise to meet the IT transformation needs of businesses. By expanding to a fourth market in Germany, Equinix will provide multinational customers with greater choice of where they build their digital edge.”
Watch this space for the announcement of the opening of HH1 in Fall 2019. In the meantime, to learn more about how to deploy an interconnection strategy locally, regionally or globally, read our Interconnection Strategy Guide.
[iv] Interconnection Bandwidth is the total capacity provisioned to privately and directly exchange traffic with a diverse set of counterparties and providers at distributed IT exchange points inside carrier-neutral colocation centers.