Digital Realty, a provider of data center solutions, has joined forces with Mitsubishi to set up a new joint venture aimed at facilitating the development of two data centers in the Dallas metro area. This venture marks Mitsubishi’s initial foray into the data center business overseas.
Mitsubishi has acquired a 65 percent equity interest in the joint venture with an initial investment of approximately $200 million. Meanwhile, Digital Realty retains a 35 percent interest and will oversee the development and day-to-day operations of the joint venture, in exchange for customary fees.
The partnership will see both companies contributing to the remaining estimated development cost of $100 million for the first phase of the project. The first phase is expected to be completed and operational by late 2024, Digital Realty said in a news statement.
Construction on the two data centers began in the fourth quarter of 2022, with the initial phase set to deliver 16 megawatts (MW) of data center capacity. The budget for this phase amounts to approximately $400 million. However, the customer has the option to expand the projects up to 48 MW of total IT load during the initial lease term, potentially increasing the combined budget up to $800 million based on current estimates.
Greg Wright, Chief Investment Officer at Digital Realty, expressed his enthusiasm about the partnership, stating, “This development joint venture leverages the success of our established Japanese partnership into the United States, while supporting our customer’s data center requirements with a like-minded, long-term investor.”
Mitsubishi Corporation highlighted the strategic importance of the investment, emphasizing the growth potential of the US data center market. The decision to invest reflects Mitsubishi’s confidence in its expertise in the data center industry, honed through its operations in Japan, as well as its track record in US real estate and urban development projects.
The US data center market has been experiencing rapid growth, driven by the increasing digitization of societies and the rise of generative AI technologies. Texas, in particular, stands out as a hub for economic development, making it an attractive location for data center investments.
