Digital Realty Trust Adds 819 KSF of Data-Center Property for $123M

February 28, 2012
By Nicholas Ziegler, News Editor

Continuing on its pattern of purchasing high-quality data centers, Digital Realty Trust has made the acquisition of the 819,000-square-foot Convergence Business Park in Lewisville, Texas, just outside of Dallas. The 168-acre complex, which is fully operational and features office space, was purchased for $123 million.

Michael Foust, Digital Realty’s CEO, said the asset will “immediately contribute stabilized cash flow to our portfolio from the existing long-term leases.” The property is currently 99 percent leased to eight tenants, who are spread over the campus’ ten buildings. Approximately 35 percent of the property is leased as data-center space to three of the tenants, which brings approximately 36 percent of rent roll. The remaining space is leased as office and lab areas.

“Dallas continues to be a very strong market for us,” Foust continued. “When combined with Datacenter Park Dallas in Richardson, located approximately 25 miles from this site, we believe that we will be able to accommodate a large majority of the data center requirements from customers seeking space in the Dallas market.”

In July of last year, Digital Realty shelled out $725 million in cash for a five-building, 919,000-square-foot data center portfolio in San Francisco. In August, the firm secured a $100 million credit facility that would fund its expansion efforts in the Asia-Pacific region. And just last month, the company spent $148 million on data centers in San Francisco and Atlanta.

The need for data centers will only continue to increase, according to Richard Scott, leader of Grubb & Ellis Inc.’s technology practice group told Commercial Property Executive last November. “Companies that benefit from web traffic conclude that, by 2015, the amount of web traffic will have increased exponentially,” he said. “And when web traffic increases, the infrastructure that supports that web traffic needs to increase. That means switches, gears and data centers.”

Primary electrical service to the Lewisville facility is provided by Texas New Mexico Power via a high-voltage utility-owned onsite substation that totals 16.5 megawatts of IT capacity.  Currently, TNMP is adding two transformers at the site, which will provide approximately 67 megawatts of additional power.  Based on current zoning, the property is capable of supporting up to 700,000 square feet of new development.