Digital Realty Trust Wraps Up $725M Data Center Purchase from Rockwood Capital

Known as the Rockwood Capital/365 Main Portfolio, the group of five data center assets consists of buildings developed within the last 10 years and managed by data center developer and operator 365 Main Inc.

July 15, 2010
By Barbra Murray, Contributing Editor

Digital Realty Trust Inc., already the top provider of wholesale data centers in the world, has just enhanced its portfolio by nearly 1 million square feet. The San Francisco-based REIT shelled out $725 million in cash to acquire a 919,000-square-foot group of data centers from a cluster of joint ventures that are majority-owned by San Francisco-based private real estate investment firm Rockwood Capital.

Known as the Rockwood Capital/365 Main Portfolio, the group of five data center assets consists of buildings developed within the last 10 years and managed by data center developer and operator 365 Main Inc. The portfolio includes three California properties: 365 Main Street in San Francisco, 720 2nd Street in Oakland, and 2260 East El Segundo Boulevard in El Segundo, Calif., a suburb of Los Angeles. The remaining two assets consist of 4030-4050 Lafayette Center Drive in Chantilly, Va., about 20 miles outside of Washington, D.C.; and in Chandler, Ariz., approximately 20 miles outside of Phoenix, the property at 2121 South Price Road, which offers room for growth with land to accommodate the development of an additional 250,000 square feet of data space.

As of March 31, the Rockwood Capital/365 Main Portfolio was approximately 94 percent leased to more than 200 tenants.

The call for data center space is on the rise, and providers are struggling to meet that demand. “Demand is three times the current supply, and it’s being driven by every type of business,” Jim Kerrigan, Executive Vice President and Director of the National Data Center Group with real estate services firm Grubb & Ellis Co., told CPE.

Digital Realty scored big with the purchase of the Rockwood Capital/365 Main Portfolio, as two of the properties are located in highly coveted markets. “The hottest leasing quarter in the last two years was in the Northern Virginia and the Phoenix area markets during the first quarter of 2010,” Kerrigan said.