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Investors Show Strong Demand for Data Centers
The Sector Could Be Strong enough to Face a Slowdown
A Data Center (Credit: iStock)
Investor Interest in the Industry Data centers remain strong and expected future demand for their services means that the sector could be strong enough to withstand a slowdown at the end of the cycle.
The sector has seen a handful of major deals this year as companies grow and acquire interests in data centers. Real estate investor. Brookfield Infrastructure plans to purchase AT & T Inc. data centers for $ 1.1 billion. EdgeCore Internet Real Estate, a new company, announced in February that it planned to spend $ 2 billion for development in North America.
Investments in US data centers that reached record levels last year continued to climb. According to a report by CBRE, Chicago has become the third largest market in terms of inventory, but its supply was still insufficient.
Leasing was above average in the first quarter, with solid growth in rents. 3 percent range. CoreSite, a company that owns data centers across the country, recently extended its lease to One Wilshire in Los Angeles. The 30-storey tower is a transport hotel, a high-tech property with a robust telecommunications infrastructure for data centers.
Some real estate investment trusts specializing solely in data centers reported double-digit growth this year in funds from operations, compared with growth of less than 3% experienced by many traditional REITs . Funds from operations is a general measure of cash flow in the trust.
Green Street Advisors has five of these REITs with a profit margin greater than 60%, according to NREI. Their total return for June was 6.7%; it decreased by 3.1% in the first six months of the year. The sector posted returns of 28.4% last year. [National Real Estate Investor] – Dennis Lynch
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