Do-It-Yourself Data Centers in Decline, According to Annual Study of Data Center Market

SAN FRANCISCO, May 2, 2011 /PRNewswire/ -- Digital Realty Trust, Inc. (NYSE: DLR), a leading global wholesale datacenter provider, has completed its annual study of the North American data center market and is reporting trends that are expected to impact the industry in 2011 and 2012. The study, which was conducted by the respected research firm Campos Research & Analysis, is based on a detailed survey of senior decision makers at large corporations in North America who are responsible for shaping their companies' data center strategies.

"There are a number of interesting data points in this year's study. Consistent with our experience, one key finding is how decisively the industry is moving toward a model that relies on the expertise and resources of datacenter specialists," said Michael F. Foust, Chief Executive Officer and Director. "The lease vs. own analysis has long been a consideration for the corporate enterprise customer. Increasingly, enterprises appear to be favoring the lease model as fewer companies are choosing to go it alone on these capital-intensive projects. Unlike many of the large Internet companies, many enterprises that participated in the survey are choosing to lower costs and minimize development risks by working with a data center specialist. I believe we will continue to see an increase in the number of companies partnering with a focused data center provider such as Digital Realty Trust as more companies seek to reduce the risk exposure and significant capital outlays for these projects."

• Only 51% of respondents who plan to expand their data centers in 2011 reported considering the do-it-yourself approach for any of their upcoming datacenter projects, a decline of 6% from last year's results.
• 60% of respondents pursuing datacenter expansion in 2011 plan to lease data center space from a wholesale provider rather than build their own facilities—an increase of 7% over last year, which follows an upward trend over the past few years.

"Another clear finding in this year's study relates to the overall strength of the datacenter market. More than 80% of companies that participated in the study are planning datacenter projects in the immediate future, indicating that the robust pace of growth in the datacenter industry will continue over the next couple of years. This is in addition to the 65% of respondents who say they have built or acquired a new datacenter in the past 24 months," said Mr. Foust.

• 85% of respondents will definitely or probably expand in 2011 - a 4% increase over last year's results - and a similar number will definitely or probably expand in 2012.
• 72% of respondents project an increase in their data center budget in 2011. The average budget increase is estimated to be 7.7% over 2010.
• The leading geographic locations cited by respondents for these datacenter projects in the U.S. are the New York/New Jersey metro area, Los Angeles, Chicago, San Francisco Bay Area and Dallas, and internationally are London, Mumbai, Paris, Singapore, Tokyo and Hong Kong.
• Based on data from respondents who plan to expand their datacenters in 2011, the average maximum IT load is 2.8 MW of electrical power and the average size is 18,000 square feet for their datacenter expansions.

"Two data points in this year's study also corroborate something we know anecdotally from our work with customers.  First, datacenter projects have become very high-profile discussions involving the highest levels of companies' management teams and second, new datacenter projects are being driven by the pursuit of energy efficiency and lower energy costs," added Mr. Foust.

• 59% of respondents reported that C-level executives have become an integral part of the decision-making process for datacenter projects.
• Power efficiency ranked as the #1 reason for new datacenter projects, rising to the top spot from #4 in last year's study.

Other noteworthy data points from the study include the following:

• The average number of datacenters operated by respondents is 3.9, and nearly one-fifth reported having six or more.
• 59% of respondents expect increases in server density in the range of 5-20% in the next 12 months.
• 76% of respondents meter power usage, indicating the continuing widespread adoption of power metering as a best practice for datacenter operations.
• The average reported PUE energy efficiency rating is 2.8; 26% of respondents reported a PUE of 3.0 or more - underscoring the significant opportunity for improved efficiency and energy savings in existing corporate datacenter facilities.

A webinar hosted by Digital Realty Trust and Forrester Research about the results of this datacenter industry survey and trends in the datacenter industry is available at www.digitalrealtytrust.com. Digital Realty Trust also plans to report the results from similar studies of the European datacenter market and the collocation/hosting market in separate announcements.

About the Methodology

Metrics reported in this study are based on Web-based surveys of 300 IT decision makers at large corporations in North America with annual revenues of at least $1.0 billion and/or at least 5,000 employees. All survey participants are directly involved in the process of managing corporate data centers, executing contracts for new data centers, implementing new data centers or expanding existing data centers. All participants were senior level executives, including CxOs, in IT, MIS, IS or Finance. The survey was conducted in January 2011.

About Campos Research & Analysis

Campos Research & Analysis conducts consumer research and business-to-business research, using qualitative and quantitative methodologies, to address the business issues of client companies. Campos Research & Analysis was founded in 1988 by Rusty Campos. Ellen Campos became a principal in the firm in 2000. Between them, the principals have nearly 50 years of research experience, both client-side in Fortune 500 companies and supply-side with Honomichl 50 market research companies. For more information, visit www.cr-a.com.

About Digital Realty Trust, Inc.

Digital Realty Trust, Inc. enables customers to deliver critical business applications by providing secure, reliable and cost effective datacenter facilities. Digital Realty Trust's customers include domestic and international companies across multiple industry verticals ranging from information technology and Internet enterprises, to manufacturing and financial services. Digital Realty Trust's 96 properties, excluding two properties held as investments in unconsolidated joint ventures, comprise approximately 16.9 million square feet as of April 28, 2011, including 2.2 million square feet of space held for redevelopment. Digital Realty Trust's portfolio is located in 28 markets throughout Europe, North America and Singapore. Additional information about Digital Realty Trust is included in the Company Overview, which is available on the Investors page of Digital Realty Trust's website at http://www.digitalrealtytrust.com.

Safe Harbor Statement

This press release contains forward-looking statements which are based on Digital Realty Trust, Inc.'s current expectations, forecasts and assumptions that involve risks and uncertainties that could cause actual outcomes and results to differ materially, including statements related to the survey results, the data center expansion plans of other companies, decision-making regarding datacenter projects, the importance of energy efficiency and lower energy costs, and expectations regarding the survey respondents' datacenter budgets, increases in server density, increasing adoption of power metering, demand for data center space, data center growth amounts and locations and the use of partners in data center projects. These risks and uncertainties include, among others, the following: the impact of the recent deterioration in global economic, credit and market conditions; current local economic conditions in its geographic markets; decreases in information technology spending, including as a result of economic slowdowns or recession; adverse economic or real estate developments in its industry or the industry sectors that it sells to (including risks relating to decreasing real estate valuations and impairment charges); its dependence upon significant tenants; bankruptcy or insolvency of a major tenant or a significant number of smaller tenants; defaults on or non-renewal of leases by tenants; its failure to obtain necessary debt and equity financing; increased interest rates and operating costs; risks associated with using debt to fund its business activities, including re-financing and interest rate risks, its failure to repay debt when due, adverse changes in its credit ratings or its breach of covenants or other terms contained in its loan facilities and agreements; financial market fluctuations; changes in foreign currency exchange rates; its inability to manage its growth effectively; difficulty acquiring or operating properties in foreign jurisdictions; its failure to successfully integrate and operate acquired or redeveloped properties; risks related to joint venture investments, including as a result of its lack of control of such investments; delays or unexpected costs in development or redevelopment of properties; decreased rental rates or increased vacancy rates; increased competition or available supply of data center space; its inability to successfully develop and lease new properties and space held for redevelopment; difficulties in identifying properties to acquire and completing acquisitions; its inability to acquire off-market properties; its inability to comply with the rules and regulations applicable to reporting companies; its failure to maintain its status as a REIT; possible adverse changes to tax laws; restrictions on its ability to engage in certain business activities; environmental uncertainties and risks related to natural disasters; losses in excess of its insurance coverage; changes in foreign laws and regulations, including those related to taxation and real estate ownership and operation; and changes in local, state and federal regulatory requirements, including changes in real estate and zoning laws and increases in real property tax rates. For a further list and description of such risks and uncertainties, see the reports and other filings by Digital Realty Trust, Inc. with the U.S. Securities and Exchange Commission, including Digital Realty Trust, Inc.'s Annual Report on Form 10-K for the year ended December 31, 2010. Digital Realty Trust, Inc. disclaims any intention or obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

SOURCE Digital Realty Trust, Inc.