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Digital Realty (DLR) Unit Expands in Zurich With New Facility

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Zacks Equity Research
·3 min read
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Digital Realty’s DLR unit — Interxion — recently announced the extension of its global platform with a major expansion project in Zurich. Particularly, the expansion comes up neighboring the current ZUR1 and ZUR2 facilities on the Interxion Zurich Campus that has emerged as a top cloud and inter-connection hub in Switzerland, and marks a strategic extension of the PlatformDIGITAL in the nation.

Shares of Digital Realty rallied 0.7% during Friday’s session, reflecting positive investor sentiment.

Construction has commenced for this facility that is referred as ZUR3. It will be developed in three phases, with the first phase slated to open by mid-2022 and offer roughly 2,900 square meters of space. At full build out, the facility is expected to offer more than 11,000 square meters of total equipped space and 24 megawatts of customer capacity.

The expansion of the Zurich campus is a strategic fit as the city has emerged as a potential digital hub. The facility offers scope to the company to bank on the digital infrastructure needs of the local and global multi-national enterprise customers, offering them access to dense network connectivity as well as interconnectivity with other key European locations.

Per Digital Realty's recently published Data Gravity Index DGx™, data Gravity intensity for the EMEA region is projected to more than double each year by 2024 and is estimated to grow at a faster rate than either North America or Asia Pacific.

Demand for space at data-center REITs’ properties has been shooting up on growth in cloud computing, Internet of Things, artificial intelligence and big data, and an increasing number of companies opting for third-party IT infrastructure.

The heightening reliance on technology in the wake of the pandemic has now become an added advantage, thanks to the work-from-home trend, e-retail and e-learning gaining popularity, spurring demand for data-center spaces. As such, data-center landlords, including Digital Realty, Equinix EQIX, CyrusOne Inc. CONE and CoreSite Realty Corporation COR, are likely to continue witnessing substantial demand.

However, a competitive data-center landscape is a concern for the company. It competes with several data-center developers, owners and operators, many of which enjoy the ownership of similar assets in locations same as Digital Realty. Amid these, an aggressive pricing pressure is expected to prevail in the data-center market.

Shares of this Zacks Rank #3 (Hold) company have rallied 14.2% so far in the year, as against the industry’s decline of 4.2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.


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