Mitsubishi Invests $200M Stake in Digital Realty's Dallas Data Centers

Mitsubishi Corporation has made a significant move into the U.S. data center market by forming a joint venture with Digital Realty, a company based in Austin, Texas. This venture involves the acquisition of a 65 percent equity share in two data centers currently under construction in the Dallas-Fort Worth metro area. The initial investment amounts to $200 million, with the remaining $100 million to be funded by each partner for the completion of the development's first phase. Digital Realty will retain 35 percent ownership and manage day-to-day operations.

Development Details and Pre-Leasing

The two data centers, scheduled to come online in late 2024, will provide an initial IT capacity of 16 megawatts. Both facilities are pre-leased to an S&P 100 customer with the potential to expand capacity up to 48 megawatts. The total development costs could reach $800 million.

Construction Projects and Partnership Details

Digital Realty's ongoing construction projects in the Dallas-Fort Worth area include developments in Lewisville and Garland, each with an estimated cost of $54.9 million. While it's unclear if these are the same properties involved in the Mitsubishi joint venture, Digital Realty has not confirmed as of yet.

Previous Partnerships and Revenue Growth

In the past year, Digital Realty has engaged in similar partnerships, notably with Blackstone and TPG Real Estate Partners, for data center developments. Financially, the company reported $1.4 billion in revenues in the fourth quarter of the previous year, showing a year-over-year increase of 11 percent.

Digital Realty's Presence in the Market

With 13 active data centers in the Dallas-Fort Worth area totaling over 2.8 million square feet, Digital Realty maintains a significant presence. The largest campus is the Convergence campus in Lewisville, covering 168 acres with 10 buildings.

Market Trends and Challenges

The Dallas-Fort Worth data center market shows robust activity, with significant construction and absorption rates. However, the availability of suitable land for development has become a challenge, leading to rising land prices and deployment densities. Despite these challenges, developers are still initiating projects, indicating ongoing growth in the market.