Digital real estate player is powering up


3 Jul 2008

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Backed by a Californian pension fund, Digital Realty Trust has been buying 13 million sq ft of data centres around the world, including two centres in Dublin. Chris Crosby is senior vice-president of the company

Eight years ago, many data centres in Dublin collapsed with the technology downturn. Why are these centres hot property right now?

Back then dynamics were different. It was mostly fantasy money at that point, not based on business principle but hype. You actually combine the two biggest hype industries in the world when you combine property with technology.

Thanks to the onset of content services like YouTube and the fact that the average email attachment is a few megabytes, there is a demand for data centres that outstrips supply.

Digital Realty Trust seems like a sort of landlord for dotcom’s like Amazon and Facebook. How did you get into this business?

We were a private equity firm backed by a Californian pension fund that specialised in making contrarian investments. After the dotcom collapse we were picking these centres up for 10 cents on the dollar. A typical data centre that cost $100m to build, after the downturn, could be bought for $5m or $10m.

We saw our opportunities early and bought data centres across the US and Europe, including WorldPort and 360 Networks buildings in Dublin.

You list Dublin in your top 10 speculative markets. How much business do you expect to do here?

Companies like Google, Amazon, Yahoo!, Microsoft and eBay have operations here in Dublin and Ireland is good for ‘follow the sun’ operations. The country has a big positive in terms of an English-speaking labour force, taxation and communications for these type of companies.

The biggest detractor for Ireland is access and the cost of power. If it weren’t for that, we’d be in an ideal spot. The electricity situation in Ireland is a disappointment.

The world is in the middle of a credit crunch. Can the data centre industry withstand another downturn?

 

The amount of data in the world is doubling every few days and businesses will need data centres. Our projection for our European business, which will be run from Ireland, is to boost it from its present 10pc of sales to 25pc of sales revenue in the next two years.

By John Kennedy