Data Centers Potential Boost for Real Estate Market

Data centers could boost the otherwise-dim metro Atlanta, Ga., commercial real estate market, where development in most real estate sectors has been stifled by job losses, tight credit markets, and reduced consumer spending. But data centers seem to have escaped these problems, as corporations expand information technology capacity--fueling the need for more data centers, which house thousands of servers to store information, power applications, and other critical functions. And Atlanta is just one city that has reported the benefits of this trend.

Recently, Digital Realty Trust, Inc., the world’s largest wholesale datacenter provider, acquired two fully leased data center properties and a 10.73 acre site in Northern Virginia. The Sterling, Va., property totals approximately 167,000 rentable square feet and is fully leased to a leading managed service provider. The Ashburn, Va., property, which is fully leased to one of the world’s largest communications companies, totals over 164,000 rentable square feet and has an adjacent 10.73 acre land parcel capable of supporting up to 140,000 square feet of new datacenter development. The total purchase price for the properties was $63.3 million.

By investing in income-producing facilities such as these at attractive risk-adjusted returns in top tier markets, Digital Realty Trust is executing its strategy to grow funds from operations (FFO), says Senior Vice President of Acquisitions Scott Peterson. FFO indicates Digital Realty Trust’s operating performance. The buildings’ strategic locations near Digital Realty Trust’s existing facilities in the state and its leases to existing customers further expands its footprint in what it calls its “key datacenter market” to approximately 1.2 million rentable square feet. The addition of the land parcel can also serve to accommodate future growth, Peterson says.