Digital Realty Trust, Inc. (DLR) reported extremely strong leasing activity for the third quarter of 2008, signing new leases for 478,000 square feet of space at some of its highest rates yet. That's the highest volume of quarterly activity to date for the company, which is the largest landlord of data center properties.
Digital Realty's strong leasing offers evidence of the resiliency of the data center sector in the midst of deep economic uncertainty. "Given the current economic environment, we are especially proud of our strong leasing performance and believe it is indicative of the critical nature of data center facilities," said Chris Crosby, Senior Vice President of Sales and Technical Services for Digital Realty.
Here's a breakdown on the volume and pricing of Digital Realty's third quarter leases:
- 262,000 square feet of Turn-Key Datacenter space leased at an average annual GAAP rental rate of approximately $155 per square foot.
- 171,000 square feet of Powered Base Building space at an average annual GAAP rental rate of $47 per square foot.
- 45,000 square feet of non-technical space leased at an average annual GAAP rental rate of approximately $13 per square foot.
Turn-Key Datacenter space is fully developed for data center use, while Powered Base Building is undeveloped space with the power and fiber connectivity already in place, allowing for easy expansion. In recent quarters, demand for finished data center space has surged as companies have sought to preserve capital.
Digital Realty also reported lease commencements totaling approximately 351,000 square feet of space in the third quarter. A lease commences when the tenant occupies the facility, which often lags the lease signing by a few months. Here's the breakdown of lease commencements by property class:
- 190,000 square feet of Turn-Key Datacenter space leased at an average annual GAAP rental rate of approximately $142 per square foot.
- 104,000 square feet of Powered Base Building space at an average annual GAAP rental rate of $30 per square foot.
- 58,000 square feet of non-technical space leased at an average annual GAAP rental rate of approximately $23 per square foot.
"The record volume of leases signed during the quarter represents a wide range of industry sectors and large, high credit quality tenants," said Michael F. Foust, Chief Executive Officer of Digital Realty Trust. "We continued to experience robust leasing activity during the third quarter across our top markets, including New York Metro, Northern Virginia, Chicago, Phoenix, San Francisco, and Paris, France, which has shown particularly strong demand for our product over the past several months,"