Digital Realty Trust (DLR), the largest data center REIT, reported strong leasing for the first quarter ending March 31. The company commenced leases totaling 334,800 rentable square feet of space, and signed new leases for 260,200 square feet of space. A lease commences when the tenant occupies the facility, which often lags the lease signing by a few months.
The company's data center leases involved two classes of property: Turn-Key Datacenter space, which is fully developed for data center use, and Powered Base Building (PBB), which is undeveloped space with the power and fiber connectivity already in place, allowing for easy expansion. Here's a breakdown of the space and leasing rates for the quarter.:
- Digital Realty commenced leases on 256,200 square feet of Turn-Key space leased at an average annual GAAP rental rate of $119.25 per square foot, and leased 46,300 square feet of Powered Base Building space leased at an average annual GAAP rental rate of $52.42 per square foot, and 32,300 square feet of non-technical space leased at an average annual GAAP rental rate of $19.31 per square foot.
- Leases signed during the quarter totaled 106,400 square feet of Turn-Key Datacenter space leased at an average rate of $100.05 per square foot, nearly 120,000 square feet of Powered Base Building(TM) space leased at rate of $67.60 per square foot, and 33,800 square feet of non-technical space leased at $25.93 per square foot.
The total amount of space leased was down slightly from the fourth quarter of 2007, when Digital Realty had a record total of 429,000 square feet. But the company's leasing volume suggests that demand for data center space has not been diminished by the economic slowdown.
The leasing rates showed some variability from previous quarters, when rates for Turnkey space had averaged around $125 a square foot and PBB rates had been in the $40 to $50 range. Digital Realty's Pamela Matthews said the fluctuation was due to differences in data centers leasing rates in geographic markets rather than any changes in demand or market conditions.
"In this quarter, the leasing in PBB was in markets where space was particularly scarce," said Matthews, including the London market.
"We are continuing to experience strong demand for our Turn-Key Datacenter and Powered Base Building solutions from a diverse base of customers throughout our top markets," said Michael Foust, Chief Executive Officer of Digital Realty Trust. "Those markets include New York Metro, Northern Virginia, Chicago, Dallas, Phoenix, San Francisco and Silicon Valley in the U.S. and London, Dublin and Paris in Europe."