Digital Realty (NYSE: DLR), the Austin, TX-based global data center operator, and Mivne Real Estate, an Israeli real estate firm, announced yesterday the formation of a joint venture that enables DLR’s entry into the Israeli market, and the planned development of a multi-tenant colocation data center and connectivity hub in the country.
The JV will enhance DLR’s position as a leading provider of digital infrastructure capacity in the greater Mediterranean region, adding to the company’s established presence in Athens, Barcelona, and Marseille. The JV will operate as Digital Realty Mivne and will serve as a DLR strategic partnership. Mivne is a major real estate developer, owner and operator with many large-scale projects across Israel and has an extensive land bank.
DLR sees the JV as a strategic growth initiative, pointing to macro trends that are driving significant demand for digital infrastructure in Israel and throughout the region.
First is location. DLR says that approximately half of the world’s population resides within a 3,000-mile radius of the center of the Mediterranean. Furthermore, Israel is emerging as an alternative cable interconnect route between the Mediterranean Sea and the Red Sea.
The new campus will be located at a key intersection along the global internet highway across the Mediterranean region, connecting Europe to the west and Asia, the Middle East and eastern Africa to the east. This new route is designed to enhance the availability and resilience of international subsea cable systems. The first subsea cable systems to traverse Israel terrestrially have already been announced and further systems are anticipated.
Second, data consumption in the region is escalating. According to Telegeography, international bandwidth in the Middle East has grown at a 30 percent CAGR since 2016, representing an overall increase in transmission capacity to the region of almost 200 percent.
Third, Israel as an end market. Israel is seen as a global center for technology innovation. The country has one of highest percentages of GDP spent on research and development and one of the highest venture capital investments per capita in the world. In addition, the four largest cloud service providers have all announced they will be building cloud infrastructure in Israel.
Digital Realty Mivne plans to develop a multi-tenant data center campus in Petah Tikvah, the primary connectivity hub in Israel. The campus will support the development of up to 20 MW of installed IT load. Phase I is expected to be operational in 2023, as customer demand grows.
“Today’s collaboration marks the beginning of a new chapter for Digital Realty’s operations, customers and partners in the Middle East. We expect this partnership to further accelerate our growth while enhancing our ability to support our customers’ digital transformation across the globe,” says A. William Stein, DLR CEO. “This partnership represents consistent execution towards new market entries. We are also gratified to partner with Mivne, leveraging its extensive experience as a local investor and operator. This announcement advances our strategy of developing strategic and highly connected, network dense data centers to strengthen and diversify Digital Realty’s portfolio and expand our product mix and global footprint.”
David Zvida, CEO of Mivne, adds, “Entering the field of data centers is a strategic growth engine for Mivne. Due to Mivne’s large and strategic land bank and its extensive geographical distribution across Israel, the joint venture will be able to develop strategically located, purpose-built data centers. This strategic partnership with a leading international operator such as Digital Realty, which has proven operating capabilities and extensive relationships with international customers and suppliers, will enable us to gain leadership in the Israeli data center market.”
DLR’s global operations comprise over 290 data centers in 50 metros across 26 countries on six continents. In Israel, Mivne Real Estate owns about 1.9 million square meters of income-yielding assets and holds about 780,000 square meters of land reserves.
By John Celentano, Inside Towers Business Editor
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