Big Cloud Provider Pre-Leases Digital’s Entire First Japan Data Center

Competition among top cloud providers fuels boom for data center companies

Yevgeniy Sverdlik

April 29, 2016

2 Min Read
Big Cloud Provider Pre-Leases Digital’s Entire First Japan Data Center
Digital Realty’s 100,000-square-foot data center in Dublin’s Profile Park. (Photo: Digital Realty Trust)

Digital Realty has pre-leased the entirety of its first data center in Japan. The anchor tenant who signed the lease is a major hyperscale cloud provider whom the data center company did not name.

There’s currently a wave of high demand for large chunks of data center space in top markets around the world as the biggest cloud providers race to increase the scale of their infrastructure and win share of the quickly growing enterprise cloud market. This wave has fueled a boom for wholesale data center providers like Digital Realty.

Read more: Report Confirms Large Cloud Providers Drive Q1 Leasing

It’s difficult to deduce which of the hyperscale cloud providers has signed the multi-megawatt lease in Osaka, but the top players in this category are Amazon, Microsoft, and Google, as well as IBM and to a lesser degree Oracle. Some Software-as-a-Service providers, such as Salesforce, could also be considered hyperscale.

Microsoft has had a cloud data center in Osaka since 2014, while Amazon’s physical presence in the market so far has been limited to Direct Connect private network links at an Equinix data center there. Google does not have a data center in Japan, but it is currently on a cloud data center expansion kick, planning to add 12 sites quickly, using both company-built and leased facilities.

Whether or not a company like Microsoft or Google already has a data center in a given market, however, says little about its future plans there.

Digital Realty management mentioned the lease on the company’s first-quarter earnings call Thursday, seemingly eager to demonstrate to analysts that the company is delivering on its promises.

The company announced a land acquisition in Osaka for a data center development in 2013. It paid $10.5 million for the 15,000-square meter site.

Digital broke ground in Osaka earlier this month, expecting to deliver the data center to the customer next fall.

Digital has also made progress on its plan to enter Germany, the other top priority in its geographic expansion plans. This February, it announced the acquisition of a six-acre parcel in Frankfurt, where it can build a three-building 27MW data center campus.

Company execs said on Thursday's call that the build-out schedule in Frankfurt will depend on demand, of which there is plenty. Digital is very careful about construction nowadays, usually shying away from building out new data center capacity in any market without a pre-lease with an anchor tenant.

Read more: Digital Realty Takes Foot Off Brake Pedal on Expansion

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