Digital Realty Targets Growing Colo Firms

Digital Realty Trust (DLR) is focusing on local and regional colocation and hosting companies as potential customers for its Turn-Key Datacenter offering, kicking off the initiative with a lease with Fibertown in Houston.

Rich Miller

February 10, 2011

3 Min Read
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Digital Realty Trust is focusing on local and regional colocation and hosting companies as potential customers for its Turn-Key Datacenter offering, seeking to combat an impression that its services are only accessible to the largest colo providers.In the first example of this outreach, Digital Realty announced today that it has leased space in Houston to Fibertown, which will use the space for its growing colocation and disaster recovery business. Fibertown plans to grow into three pods of Digital's turn-key space in Houston, representing 30,000 square feet of raised-floor space.

Fibertown is a colocation and business continuity specialist based in Bryan/College Station Texas, about 100 miles northwest of Houston. Its new space is located in Digital Realty's Datacenter Park Houston.

"The Digital Realty team worked closely with us to find the appropriate space that would support our aggressive growth plans," said John Clanton, CEO of Fibertown. "Utilizing Digital Realty Trust's financial resources and leasing options have enabled us to put our growth plan into action."

Under-Served Markets

"We are committed to working with colocation, hosting and IT services companies of every size, including those in under-served data center markets, such as Houston, St. Louis, Charlotte and Philadelphia," said Brent Behrman, Senior Vice President, Sales at Digital Realty Trust. "This project with Fibertown is a great example of how we can support companies that are investing in growing their businesses

"The key is flexibility," Behrman added. "Through our leasing model, global, national as well as regional customers can eliminate the up-front costs of these capital-intensive projects and quickly take advantage of growth opportunities."

Digital Realty's initiative reflects the growth seen by regional colo and hosting firms, who have been a laregly unheralded success story in the data center industry. As these companies build their businesses, they confront the capital-intensive nature of the data center business, which makes expansion an expensive proposition.

An Additional Growth Path

In some cases, these regional companies have been bought by private equity firms, who represent an exit strategy for founders and can invest capital to build new facilities in markets with an established track record of demand for colocation and managed hosting services.

Digital Realty is offering an alternate growth path for these local and regional players. The strategy represents a vote of confidence in the potential for "second-tier" cities as growth markets for colocation and hosting. At the same time, real estate investment trusts like Digital Realty tend to focus on tenants with strong credit ratings, which can skews the tenant base towards larger companies.

Dan Ephraim, director of sales at Digital Realty, says the company wants to address any notion that it's hesitant to work with small to mid-sized hosting and colocation providers.

"We really believe in the growth of this sector," said Ephraim. "This is really a strong area of focus for Digital Realty. Because we have traditionally worked with larger colo firms, there may be a misperception that we only want to work with large clients. We are working very hard to make sure these companies know that this is a misperception. We're willing to put our capital to work."

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