Iron Mountain Preleases 27 Megawatt Data Center in Frankfurt
Iron Mountain Incorporated IRM has signed a 27-megawatt data-center lease deal for its new FRA-1 data center in Frankfurt, Germany, which is currently under construction. This preleasing with a U.S.-based Fortune 100 customer reflects the decent demand for the company’s data-center space.
FRA-1 is being developed in three phases, each phase offering 9 megawatts of power capacity. The first phase will likely be completed in the second quarter of 2021 and the full build-out is expected in the June-end period of 2022.
The lease is, therefore, expected to start in the second quarter of 2021, and run for 10 years initially, with renewal options to extend the term. While the customer will lease the entire 27 megawatt turn-key data center, upon lease commencement, the customer will take the initial 9 megawatts. Within five years, the customer is committed to scaling to the full capacity of 27 megawatts.
Backed by the strength in first-quarter leasing activity and execution of the hyperscale lease in Frankfurt, Iron Mountain now anticipates to substantially surpass its prior leasing target for new and expansion signings of 15-20 megawatts for the current year. The company plans to update on this front during its second-quarter earnings conference call.
Frankfurt is a top global data-center market and has emerged as the second largest in the European FLAP region. Also, one of the world's largest internet exchanges, DE-CIX, is present in this market. This peering exchange has hundreds of large networks available for customers.
Amid this, Iron Mountain’s focus on ground-up developments in Frankfurt seems a strategic fit. It is also targeting for such developments in Northern Virginia as well as expansion at the existing data centers in Amsterdam, London, New Jersey, Northern Virginia, and Singapore, as part of its efforts to bank on hyperscale opportunities.
With growth in cloud computing, Internet of Things and big data, and an increasing number of companies opting for third-party IT infrastructure, data-center REITs are witnessing a boom market in Frankfurt as well as worldwide. Furthermore, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to six years.
Apart from these, data centers are poised to benefit from the heightening reliance on technology in wake of the coronavirus pandemic. As such data-center landlords, including Iron Mountain, Digital Realty DLR, Equinix, Inc. EQIX and CoreSite Realty Corporation COR, will keep witnessing significant demand.
Iron Mountain’s shares have lost 4.1%, so far this year, as against the industry’s decline of 3.8%.
Currently, the company carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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