Data Center Rents and Leasing Trends

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As the largest landlord of data center and Internet gateway properties, Digital Realty Trust’s portfolio provides an overview of trends in the broader market for mission-critical facilities. Digital Realty (DLR) has recently filed its annual report with the SEC, which includes quite a bit of information about the company’s data center holdings. The filing included a breakdown of DLR’s 59 properties at year-end 2006, with their total square footage and percent leased, as well as the gross annualized rent per square foot.

That last data point provides an overview of leasing trends in the data center market. In an earlier analysis of pricing trends we noted that in the third quarter of 2006, Digital Realty commenced leases for 114,000 SF feet of finished data center space at an average of $97 a square foot, while new leases signed in the quarter averaged $109 a square foot. The portfolio-wide data from this week’s 10K filing (PDF, 1.5MB) fills out the picture, showing which facilities and markets are able to command those premium rates.

An important caveat: any survey of data center leasing involves apples vs. oranges comparisons of facilities that differ on key criteria. We’ve broken this analysis into two sections, the first covering data center properties and the second looking at Internet gateways (also often known as carrier hotels). Here are the Digital Realty data center properties with the highest gross annualized rent per square foot, in U.S. dollars:

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The former AboveNet facilities acquired in October (1807 Michael Faraday Ct., 8100 Boone Boulevard and the 83K of space at 111 Eighth) fill three of the top five spots. All have multiple tenants that initially leased space from AboveNet. In Phoenix, 120 E. Van Buren also has multiple tenants. Since these are average prices, in each of these sites some tenants are paying higher rates, as suggested by the 3Q06 data from the company.

The remainder of the top 10 provides an indication of why Digital Realty is now investing heavily in a European expansion, and has selected Dublin as the site of its first ground-up “greenfield” data center construction project, a 120,000 square foot facility at Clonshaugh Industrial Estate.


The list of the Internet Gateways with the highest gross annualized rent per square foot shows a huge gap between the top site, 6 Braham Street in London, and the rest of Digital’s portfolio holdings in this property type. It reinforces the widely-held notion that London has the world’s largest gap between data center demand and available supply. Again, all figures are in U.S. dollars:

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As with the data center list, there are several factors to consider in comparing these numbers. These facilites are more likely to have a mix of office tenants as well as data center tenants. Most have been established bandwidth hubs for years, and thus also are more likely to have long-term telecom tenants, whose leases wouldn’t reflect recent market pricing.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.