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

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Zacks Equity Research
·3 min read
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Digital Realty Trust, Inc.'s DLR unit — Interxion — recently announced the extension of its global platform with a major expansion project in Denmark. Particularly, the company is coming up with its third data center that will be neighboring the current CPH1 and CPH2 facilities on the Interxion Copenhagen Campus which has emerged as a top cloud and inter-connection hub in Denmark, and marks a strategic extension of the PlatformDIGITAL in the nation.

Shares of Digital Realty declined 2.7% during Wednesday’s session, reflecting broader market concerns.

Construction has commenced for this facility referred to as CPH3. It will be developed in three phases, with the first phase slated to open in the first half of 2022 and offer roughly 2,300 square meters of space. At full build out, the facility is expected to offer more than 7,000 square meters of total equipped space and 14 megawatts of customer capacity.

The expansion of the Copenhagen 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 enterprises. Per management, customers can reach "80% of Europe's GDP in less than 25 milliseconds."

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 8.4% so far in the year, against the industry's decline of 5.5%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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