Digital Realty Powers Ahead: Record Leasing, Strong Backlog, and Optimism for Future Growth
As the first quarter of 2025 comes to a close, Digital Realty has cemented its position as a leading player in the data center industry. Despite headlines focused on advances in Artificial Intelligence (AI) and its implications for AI infrastructure build-out, the company continued to execute its full-spectrum meeting place strategy with remarkable success.
Key takeaways from the first quarter results include strong overall leasing of $242 million, consistent with the record pace set in 2024. This achievement pushed Digital Realty's backlog of booked-not-billed leases to a new record of $919 million. The company also saw Core FFO per share growth accelerate ahead of expectations for the quarter.
Andy Power, President and CEO of Digital Realty, highlighted the strength of the first quarter results and the visibility provided by the record backlog, stating that he remains confident in the 2025 growth targets. He also expressed encouragement by the 40-plus percent increase in the 2026 backlog since the beginning of this year.
The company's leasing activity was robust across its primary product segments, with nearly $400 million of new leasing completed in the quarter. This included $69 million of leasing in the 0-1 megawatt plus interconnection segment, which is Digital Realty's second-highest ever behind only last quarter's record.
The single largest lease in the first quarter set a new record for Digital Realty in terms of total annualized rent signed. Despite some slower pace from hyperscale customers, the company continues to be encouraged by the demand drivers of digital transformation, cloud, and AI. This is reflected in consistent interest across their portfolio, including large capacity blocks.
Pricing reached a new milestone in the quarter, with the overall rate on new data center leasing reaching $244 per kilowatt per month, up 10% from the prior record, reflecting strength within the greater than a megawatt category. The company's pipeline remains healthy and diverse, providing strong visibility for future growth.
Digital Realty's evolution of its funding model this quarter, following the successful formation of its first U.S. hyperscale fund, has enabled it to meet the growing needs of customers while scaling its balance sheet and enhancing returns. This strategic move further solidifies the company's position as a leader in the data center industry.
