Digital infrastructure is the clearest real estate example. In Frankfurt, London, Amsterdam, Paris and Dublin, grid connection lead times can reach seven to ten years, far beyond a typical two- to three-year data-centre construction programme.⁷

The constraint is global, but Europe may face a slower adjustment. U.S. markets, such as Northern Virginia, also face long interconnection queues as AI and data-centre demand outpaces network build-out. The more meaningful difference lies in the response rather than the exposure. In our view Washington appears likely to resolve capacity bottlenecks more pragmatically, while Brussels permitting and regulatory architecture points to a slower clearing process – a distinction that matters less for whether the constraint binds than for how long investors should expect it to persist.

But treating this as a data centre issue understates its reach. The Netherlands shows how scarcity is moving beyond data centres into mainstream property. The number of provinces reporting connection restrictions more than doubled between 2022 and 2024, while the high-voltage connection queue grew almost tenfold.⁸ New housing developments can now be placed on waiting lists and logistics properties in congested postcode areas have recorded materially higher vacancy than those in unconstrained locations.⁹
 

The Policy Response – And Its Limits

Policymakers are responding. The European Commission's European Grids Package, launched in December 2025 alongside the Energy Highways initiative, proposes a revised Trans-European Networks for Energy regulation, an accelerated permitting directive, and guidance on efficient and timely grid connections.¹⁰ 

At the regulatory level, the Council of European Energy Regulators (CEER) notes that while most Member States continue to apply a 'first-come, first-served' approach to grid connections, several are introducing complementary queue-management measures, including project maturity assessments, financial guarantees, reservation deadlines and use-it-or-lose-it provisions. 

These mechanisms are intended to prioritise credible projects and reduce speculative applications that inflate connection queues.¹¹ In conjunction with broader national reforms, these measures should improve the allocation of scarce grid capacity toward viable projects, however, they do not materially increase underlying network capacity and cannot substitute for physical grid expansion.

Estimates suggest that Europe requires about €100 billion of annual grid investment to remain on a Net Zero-consistent pathway to 2050, compared with actual investment of approximately €70 billion in 2024, itself around 50% higher than five years earlier.¹² Against that backdrop, investors underwriting assets today should assume that grid scarcity is likely to persist through much of the development or holding period, easing unevenly across markets and potentially later than headline policy ambitions suggest.
 

Implications For Real Estate Underwriting

Investors should assess grid access as a discrete underwriting variable: whether capacity is constrained, when that constraint could affect the business plan and which party bears the resulting risk. Mitigants should be secured before capital is committed, including connection capacity with headroom, on-site generation or battery storage, contingency capital and development milestones linked to grid delivery.

The valuation distinction is becoming visible. Two otherwise comparable assets are not economically equivalent if only one has a secured connection with spare capacity. An asset that cannot be expanded, intensified or electrified may appeal to fewer buyers and occupiers, making grid access a growing source of differentiation alongside energy performance.

Grid access and capacity should be incorporated explicitly into the underwriting framework. Assets and developments can be assessed against factors including electrification requirements, local grid headroom, queue position and planned reinforcement at market and substation level. 

This assessment can inform investment review and ongoing portfolio monitoring, alongside early market screening, engagement with occupiers on load profiles and electrification plans, and timely connection applications coordinated with planning and permitting.

Grid capacity is transitioning from an operational consideration to a material determinant of location, value and liquidity in real estate investments. Investors who explicitly assess grid exposure (or on-site energy production and storage) at acquisition are more likely to avoid delayed business plans and stranded development outcomes and, in the most favourable cases, may secure access to a competitive advantage that is becoming harder to replicate.