President, CEO & Director, Digital Realty
Digital Realty's global CEO on REITs, private equity, and geopolitical strategies for data centres
In an exclusive interview on the floor of PTC’24, The Tech Capital spoke with Andy Power, President & CEO of Digital Realty, who shared his advice on navigating the complexities of the data centre landscape, shedding light on the influence of private equity, geopolitical dynamics, market volatility, strategic investments, cloud deployments, and the role of Real Estate Investment Trusts (REITs) in shaping the industry's future.
Power highlighted a significant shift in the data centre market, particularly with the growing influence of private equity. He noted that private equity has played a pi...
About Andrew Power
Andy Power, president and CEO of Digital Realty, has described the current period as "the largest infrastructure buildout in the history of mankind," comparing the company's work to building "highways, airports, seaports" for data rather than goods and people. He stated that Digital Realty is focused on markets with "diversity of demand" from enterprises, cloud providers, and AI companies, and that the company prioritizes "locational and latency sensitivity" rather than chasing demand to any location. Power noted the company signed its largest lease in history — a 200-megawatt AI inference deal with a double-A rated hyperscaler in the Charlotte market — and that pricing on new leases reached $244 per kilowatt per month, a record. He also said the company's backlog reached a new all-time high and that it raised its 2026 core FFO guidance after a record start to the year. Power has also addressed the industry’s public perception, stating at the Energy Future Forum that the data center industry has been "unsung heroes" and needs to communicate "fact and fiction" regarding its impact on the grid, taxes, and water usage. He said the data center industry in the U.S. employs more workers than the automobile industry and that Digital Realty’s 300 data centers consume less water than 18 California golf courses. He added that when transacting with large customers, contracts typically run 15 years or longer, and he does not view the current demand as a bubble, but rather as the beginning of a "massive large scale capital intensive buildout of digital infrastructure."
Transcript (25 segments)
✨ AI-enhanced transcript with speaker attribution
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Interviewer0:05
Hello and welcome to Hawaii to PTC '24. Joining me here now is Andy Power, President and Chief Executive Officer of Digital Realty. Andy, thank you so much for talking to me, it's always a pleasure. Last year I saw you walking through one of the corridors, you had just been promoted to CEO of Digital Realty, so very belated congratulations on camera.
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Andrew Power0:22
Thank you, I'll take it anyway.
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Interviewer0:24
How's PTC treating you this year?
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Andrew Power0:27
You know, it's great to be back here at PTC, see so many fabulous customers and partners from around the world all coming together. Not too shabby of a location to get together here. But really excited to get out of the gates in 2024 and talking about digital transformation and technology here at PTC.
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Interviewer0:44
It takes time to get here, worth the trip, but it's also good because you can be present. I think the time zone really helps with that. But speaking of being present, there's a lot of pressing issues that we've heard at this conference this year. Before we go into specifics of what's happening here, how would you characterize the challenges facing the global data center landscape right now, with a special mention around private equity because I think that's been on everyone's lips?
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Andrew Power1:12
Obviously the world is in a certain period of uncertainty and volatility, but I can tell you the themes of digital transformation and technology are dominant and taking top priority for many, many customers. We're on the heels of a global pandemic that shifted ways of working and buying and consuming, and I see corporate enterprises and hyperscale cloud providers all leaning into digital transformation and technology. The landscape of players has changed. Digital Realty is one of two in the public markets, and we've welcomed both private capital as competitors and partners. We see this opportunity so large and long-term in scale and global in nature that harnessing both public equity and private capital has been the win-win to deliver the growth for our customers.
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Interviewer2:05
Before we go into the growth part, I'm just going to pick up on what you said — the world's in a bit of an uncertain period. There's a lot of elections across the entire globe, more than half of the world's population is going to choose a new leader this year. We are going through a rough period in terms of geopolitics. How do you think that's going to impact the data markets, access to capital, and how is Digital Realty navigating all that? What's the contingency plan?
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Andrew Power2:30
Digital Realty is supporting 5,000 customers on six continents across 50-plus metropolitan areas, so we are in numerous geopolitical environments, languages, and currencies to say the least. We're also in a capital-intensive business and we have to be prepared for whatever volatility may present itself. You've seen a lot of uncertainty in capital markets conditions. Maybe we're on the healing side of the interest rate rise, which is a good thing. We are just making sure we're planning for those rainy day scenarios and never leaving our customers without that future growth capacity. But listen, it's exciting times. The world is in some ways pulling apart, but in other ways technology and communications are bringing us together, which makes what we do so much more important now more than ever.
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Interviewer3:20
Digital has no borders — hopefully we will not have any walls built in digital. But do you think some markets will be faced with more challenges when it comes to access to capital, raising capital — let's talk about private equity, debt. If you do a regional comparison, who's going to be more on the front line?
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Andrew Power3:43
The stability of governments, the stability of currencies, and cost of capital and interest rates influence investment, there's no question about that. But the priorities of what's happening inside our data centers — digital transformation — is paramount across all regions, all countries, no matter what. I think this is a time in the world where the United States has this large growing economy. I was going to say stable government, but our government certainly makes it feel not stable sometimes. The US is really taking the lead on technological infrastructure investment. As you see the likes of artificial intelligence roll out globally, the US is really where the home of the largest capacity growth is. You're seeing both Europe and Asia play major pieces of that. I think these trends, just like you saw the cloud computing trends — very much started in the US, grew in Europe, and now in Asia Pacific — I think they'll all globalize in a scheme of time. But again, the ups and downs of broader economic themes and geopolitical uncertainty makes it tougher to navigate, and that's what brings it back to providers like ourselves who have boots on the ground experiencing working in numerous parts of the world. So whether it's Singapore or Sydney, Ashburn or Chicago, or Frankfurt or London, we can help you.
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Interviewer5:08
You have a lot of pins on the map — more than 300 of them, so you can't list all of them. Before we get to the current and the future pins on the map, how excited are you about AI? What really needs to happen for this to really kickstart, or has it already started? Do we know where we're going with this?
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Andrew Power5:26
Unlike a lot of the buzzwords that have come through data center land, I believe AI is real when it comes to data center capacity. We are still in the infancy or the early innings of where this can go. Large language models are being built with large contiguous capacity blocks with urgency — very US-centric today, but globalizing as we speak. The next phases of this, with inference — testing the models, the move from public data to private data sets, the move from public consumer use to enterprise use — I think is going to even further emphasize the proximity of workloads and data. And I think it's going to bring it back to the major markets where we're supporting both private, hybrid, and also our public cloud providers. So I think it's going to be big, and I think we've got a long runway of growth to come. It's a nice place to be. We're very fortunate to be able to play in this hard asset infrastructure as the technology is going to change all of our lives.
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Interviewer6:31
Speaking about infrastructure, what is the plan for Digital Realty in the next coming years? We can talk about the market footprint, which is about 50 different metros — I think it's probably more than that, it's hard to keep up because it's almost a new data center every week on average. But 300-plus data centers, 50-plus metro areas. What's the plan for the existing portfolio, expansions, and especially with a mission to sustainability? How will all the facilities evolve to the forefront?
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Andrew Power7:00
We've been pruning our portfolio to make sure we're focusing on markets with robust and diverse customer demand and with infrastructure that can future-proof our customers' growth. On the technical side, we've been densifying up for power and we've been a leader at this. We were supporting AI and high-performance computing, higher power densities, before I joined Digital. We've been retrofitting in the last year and we've been making sure our designs are future-proof for what comes next. When it comes to growth and capital, we're spending close to $3 billion on new data center capacity this year. That's on top of a land bank that's north of 3 gigawatts of growth around the world. In terms of new markets, we're coming online with new capacity in Barcelona, in Rome, and Crete. We've recently grown into South Africa with our Teraco investment. We're in Asia Pacific coming online with a first carrier-neutral facility in South Korea, and last year we capped it off with a big milestone — expanding our partnership in India to bring in Reliance Jio into our partnership with Brookfield. And just last week we opened up in Chennai for the first time. I think you're going to see more growth into new markets. I think Asia Pacific is going to be one of those places where you're going to be adding a new pin to the country maps. The growth is multifaceted, and I think we're ready for what the future brings.
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Interviewer8:27
Those 3 gigawatts of land banking — is that a timeline to bring it on, or?
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Andrew Power8:30
It really depends on where they are located. Sooner than we expected is what I would say is the theme. At the end of last year, we also announced a partnership with Blackstone, one of the biggest asset managers, on a $7 billion program that'll accelerate our development close to 20% of that gigawatts in both Northern Virginia, Paris, and Frankfurt. The likes of AI is pulling forward those land banks because our customers need those large capacity blocks sooner and sooner.
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Interviewer8:58
What does Digital Realty want to be in the 2030s? When we get into the next decade, when a lot of these conversations about AI will have maybe not faded away but found some plateau — conversations where we know more or less where things are going — what's the dream, what's the goal for Digital Realty?
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Andrew Power9:14
We want to be the provider of choice, the enterprise qualification customer — the majority of our 5,000 customer accounts that I hope I'm going to be able to double to 10,000 by 2030, if not sooner. And we want to be the partner of choice to the biggest hyperscale cloud providers and the AI industry. Those are our two missions for 2030 — really building a business that could stand the test of time.
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Interviewer9:36
A quick question on REIT structures, because there's been a few conversations around does this make sense in this day and age. What's your view? Does the data center REIT structure still make sense?
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Andrew Power9:50
The REIT structure has got some positives and negatives to it. The negatives — we do have to distribute our earnings and pay a recurring dividend from our cash flow. The positives are it puts us in a food group where investors want to reward us for our growth capital and help fund our growth, in addition to having no tax leakage. Whether you're a REIT or not a REIT, you can manage your tax efficiency and your capital retention in different formats. The bigger theme in my opinion is this opportunity is so large, so long-term, so tremendous in scale that you need to harness both public capital and private capital to tackle it, and that's what we've been trying to do with our business here at Digital.
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Interviewer10:37
Matching the Blackstone partnership — $7 billion. If I just handed you now a $7 billion check, what would you do with it?
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Andrew Power10:44
I would be spreading it around to the numerous markets where I'm in today and adding a few more, really making sure that we're future-proofing with continuous capacity growth for our customers. I think that's going to be the most precious — getting our hands on those valuable kilowatts and megawatts that our customers need in a reliable and hopefully sustainable fashion. That's where I'd be investing my dollars — those core markets where we are today around the globe.
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Interviewer11:11
Last question that I'm asking everyone that we do interviews here at PTC '24. When we come back to PTC next year, what's the one thing that is achievable but you think the industry really needs to get their act together and get done over the next 12 months? Something paramount, taking into account everything that's happening.
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Andrew Power11:27
I think the industry needs to double down on sustainability. We are growing at such a rapid rate, we're such a consumer of power. We need to make the table stakes more and more important, and we all as constituents of all elements — of power in particular — need to really take a big step forward in innovation and creativity in delivering more sustainable power and be part of that solution along the way. We've only got one Earth, so we've got to take care of it.
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Interviewer11:58
Got it. Andy Power, President and Chief Executive Officer of Digital Realty, thank you so much for talking to us. And as for home, thank you for watching, and do check our website and social media for more daily news from the digital infrastructure sector worldwide at Capacity Media.