Whenever a major technological shift takes place, it spawns a slate of new industries to provide support and logistics for the new technology. The most current example would be today's digital age, which has made it necessary to build data infrastructure just like the automobile age birthed the freeway-building boom. Digital Realty Trust's CEO Andrew Power recently discussed the rise of the data center, and why this real estate investment trust (REIT) is well-positioned for the future.
Trending Now:
- A billion-dollar investment strategy with minimums as low as $10 — you can become part of the next big real estate boom today.
This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing. - This billion-dollar fund has invested in the next big real estate boom, here's how you can join for $10.
This is a paid advertisement. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the Fund's prospectus. Read them carefully before investing.
Although Digital Realty Trust (NYSE: DLR) dates back several decades, the last 18 months have witnessed this REIT's share value surge from the low $80s in early 2023 into the $150s today. The rise of AI, along with the increasing reliance of public and private industry on digital services, has turned data centers into one of the strongest growth opportunities in the real estate sector. Digital Realty Trust, and its investors, are benefitting heavily from this development.
During a recent interview with CNBC, Power touched on several different subjects concerning his REIT's strong performance. He noted that Digital Realty Trust is currently "supporting 5,000 customers in 50 metro areas in six continents." However, he noted demand in the U.S., which had been a little slower than the international demand for data centers, is now growing even more rapidly.
Power said, "Traditionally, outside the U.S. markets were growing faster than the more mature U.S. markets, but with the advent of artificial intelligence, and that incremental wave of demand has kind of come full circle, and our North American market has been the largest contributor to our growth recently."
He continued by noting, "The good news is Northern Virginia, which is about ¼ of our business and our largest market. We have large capacity blocks and that is the most precious market. We have $3 billion worth of data centers coming online and customers queuing for that capacity." Considering the U.S. government, and major tech players like Amazon have hubs in the Washington D.C. area, it would appear Power's instincts are correct.
Further along in the interview, Power addressed questions of whether Digital Realty Trust would be able to perform for the long term by saying, "These are secular, long-term demands trends. I think the topic of Northern Virginia came up, and the quarter was pretty darn robust even without Northern Virginia but give us a quarter or two and I think that'll be back on the charts as one of our top contributing markets."
It's a well-known fact that AI must consume and process data at an incredibly high rate to function, and Power told CNBC this ongoing necessity will create continued opportunities for Digital Realty Trust. He said, "On NVIDIA and AI – we're the physical manifestation of AI. We're converting that to recurring revenue, and long-term contracts with most established customers out there."
Power elaborated further by saying, "We're focused on 50 metros where there is core demand from a diverse set of customers that are already doing digital transformation, and cloud computing inside our data centers and want to grow with us. Lastly, it's happening at a time when the supply is more constrained than it's probably been in 20 years of the data center industry."
Don’t Miss Out:
- Get ‘em while you can — investing in this asset class may be reaching a high-water mark but you can still make returns right now.
- Find out how you compare to the average American couple’s retirement balance — will you make the $1,000,000 mark?
CNBC prodded Power on potential market disruptions by asking about the possibility of some of his largest tech clients building their own data centers, and whether that would disrupt Digital Realty Trust's business model. He acknowledged the possibility while noting that he doesn’t see it as an existential threat to Digital Realty Trust's operation.
He said of Big Tech, "They certainly have the ability to bring on technology and operate their own data centers, and some of them do it. But in these major metros where we have gigawatt banks of capacity to grow, where we can support them from South Africa to Ashburn (VA) or Northern Virginia to Singapore, we are a value add and a force multiplier for their growth."
Power is also aware of the environmental sensitivity related to his industry. AI consumes almost as much power as it does data. Power told CNBC that Digital is leading the way in "greening their grid by doing things like investing in wind farms and other green energy tech in response to strong customer demand. Power referred to these efforts as "hyperscaling" Digital's ability to deliver green power to their customers.
It's safe to say that Power is bullish on the future of Digital Realty Trust. He told CNBC that his REIT's ultimate strength lies in its ability to be a "one-stop shop with global reach for customers and we’re delivering it from small footprints to the largest footprints in terms of data center land, and we've been doing this solely for 20 years strictly for digital infrastructure."
Better Yields Than Some REITs?
The current high-interest-rate environment has created an incredible opportunity for income-seeking investors to earn massive yields, but not through REITs.
Arrived Homes, the Jeff Bezos-backed investment platform has launched its Private Credit Fund, which provides access to a pool of short-term loans backed by residential real estate with a target 7% to 9% net annual yield paid to investors monthly. It paid 8.1% in July. The best part? Unlike other private credit funds, this one has a minimum investment of only $100.
As long-term rates go down and short-term rates stay high, there’s a unique chance to invest in fix & flip loans before yields drop. Check out Benzinga's favorite high-yield offerings.
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
