Keepin' It Real 

Economics, Housing, & Commercial Real Estate Analysis

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  • Alex Pettee, CFA

Data Center REITs: Battle Of The Clouds

  • Data Center REITs - the physical epicenter of the "cloud" - continue to ride the substantial secular tailwinds behind the “big-data" and cloud computing boom, surging nearly 50% in 2019.

  • Storm clouds have been building around the high-flying technology-focused sector, however, as intense competition and furious supply growth have weakened pricing power.

  • Investors have been unfazed by the mounting competitive threats, even after CyrusOne announced plans to cut 12% of their workforce, citing "continued moderation in demand from hyperscale customers."

  • Responding to pressure from the hyperscale giants – Amazon, Microsoft, and Google – data center operators have turned to M&A to regain pricing power, a trend we expect to continue.

  • While we expect continued robust demand for data center space, the outlook for the REITs themselves remains cloudy, but consolidation and "next-generation" cloud applications could favorably shake-up the competitive dynamics.

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Hoya Capital Real Estate, LLC

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Hoya Capital Real Estate ("Hoya Capital") is an SEC-registered investment advisory firm that provides investment management services to ETFs, individuals, and institutions, focusing on portfolio and index management of publicly traded securities in the real estate industry. It is not possible to invest directly in an index. Index performance cited in this website or commentary does not reflect the performance of any fund or other account managed or serviced by Hoya Capital Real Estate. Nothing on this site nor any published commentary by Hoya Capital is intended to be investment, tax, or legal advice or an offer to buy or sell securities. Information presented is believed to be factual and up-to-date, but we do not guarantee its accuracy and should not be considered a complete discussion of all factors and risks. Data quoted represents past performance, which is no guarantee of future results. Investing involves risk. Loss of principal is possible. Investments in companies involved in the real estate and housing industries involve unique risks, as do investments in ETFs, mutual funds, and other securities. Hoya Capital has no business relationship with any company discussed/mentioned. Hoya Capital never receives compensation from any company discussed/mentioned. Hoya Capital, its affiliate, and/or its clients and/or its employees may hold positions in securities or funds discussed on this website and our published commentary. A complete list of holdings and other important disclosures and definitions are available by clicking the links below.

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