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Digital Realty Adds Internet-Exchange Service at Two Regions

Zacks Equity Research

In efforts to expand its internet-exchange platform, Digital Realty Trust DLR recently introduced Digital Realty Internet Exchange Platform, or "DRIX," to the company’s data centers in Ashburn, VA, and Chicago, IL.  The company's DRIX footprint include New York, Atlanta, Dallas, and Phoenix, that provide connections in these locations to the peering platform. 

DRIX offers high-performance internet peering services, enabling customers to exchange IP traffic quickly and easily. The platform aims to reduce operating costs and boost network performance, adding network resiliency for its partners. Customers can access different exchange partners, which complements the collection of clouds and networks in Digital Realty's meet-me-rooms that are present globally.

The expansion supports Digital Realty’s impressive colocation foothold in Northern Virginia, the world's largest data-center hub, along with the company's presence at 350 East Cermak, Chicago, one of largest data-center single buildings in the world.

Notably, Digital Realty’s internet-exchange platforms in these regions carry significant expansion capacity and offer single cabinet to multi-megawatt deployments solutions. Management believes the outburst of IP traffic has spurred demand for highly scalable, reliable and reasonable internet-exchange solutions.

Hence, the company’s efforts to provide internet-exchange services across its portfolio are a strategic fit.

Admittedly, data-center REITs are experiencing a boom, with growing popularity of cloud computing, Internet of Things and big data, as well as the use of third-party IT infrastructure by several companies.

Further, estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. In fact, demand has been outpacing supply in top-tier data-center markets. These markets are absorbing new construction at an accelerated pace despite enjoying high occupancy. This, along with an improved outlook for economic growth, will significantly aid data-center REITs such as Digital Realty, as well as Equinix EQIX, CyrusOne Inc. CONE, CoreSite Realty Corp. COR and others.

Nonetheless, this robust outlook may intensify competition in the upcoming period from existing as well as new players. Amid these, pricing pressure is anticipated to prevail for this real estate asset class, resulting in muted growth.

Digital Realty currently carries a Zacks Rank #3 (Hold). Over the past three months, its shares have declined 9.2% as against the industry’s growth of 2.4%.


You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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