Digital Realty Targets Build-to-Suit Market

Continuing its expansion beyond the wholesale data center market, Digital Realty Trust said today that it will partner with KDC to offer build-to-suit data centers for corporate customers. Digital Realty (DLR), the largest developer of data center properties, said the two companies will partner to build custom data centers for clients, who then lease the building.

"For the first time, customers have a one-stop shop for their build-to-suit data center projects," said Chris Crosby, Senior Vice President, Corporate Development at Digital Realty Trust. "Additionally, we are able to provide a lease for the custom data center (including the mechanical and electrical plant) without financial contingency, offering a simple financial model that saves customers significant capital."

Build-to-suit projects are less risky than wholesale multi-tenant data center projects, which are typically built either on a speculative basis or based on a commitment from an anchor customer. In either scenario, the project goes forward before it is entirely leased. 

The build-to-suit offering from Digital Realty and KDC targets companies that prefer  a dedicated data center over a shared facility, while allowing them to benefit from Digital's design and construction management experience. This builds on the company's POD Architecture Services, which allow companies to license Digital Realty’s data center designs and save money on procurement by leveraging DLR’s bulk purchasing power.    

In KDC, Digital Realty has a partner with extensive experience in this niche. "KDC is the leader in corporate build-to-suit projects, having developed more than 110 over the past decade," said Crosby. "The firm has a tremendous track record in completing custom development projects on-time and on-budget. KDC's expertise is a perfect complement to Digital Realty Trust because we are the ultimate landlord for built-to-suit datacenters."

"At a time when most companies are having difficulty obtaining financing for major construction projects, our alliance provides a simple, best-in-class process for the leasing of a custom datacenter facility," said Steve Van Amburgh, CEO at KDC. "This alliance is a natural complement for both companies."

"The timing is ideal for the emergence of a national developer that can finance and develop build-to-suit data centers that will fit the location and technical needs of the end user," said Ab Atkins, Senior Vice President at KDC. "The alliance between KDC and Digital Realty Trust is the perfect platform to meet this market need head on."