Jim Kerrigan,SIOR | Managing Principal | jim.kerrigan@nadatacenters.com

2020 Datacenter Leasing by City 2020 Datacenter Leasing by Provider

Data Center Real Estate Review: 2020

• Overall, Multi-Tenant Data Center (MTDC) leasing activity in

the US in 2020 was just under 700 MW was more than three

times greater than that in 2019 and twice that of 2018, which

means it was the best all-time year for MTDC leasing.

• Several of these transactions involved the expansions of

hyperscale tenants in the same location.

• Northern Virginia (NOVA) led the charge, leasing more than

500 MW which doubled 2018 and was 80% of the total for US

& Canada.

• The low rental rates resulting from the significant inventory at

the beginning of the year in NOVA increased (for the smaller

tenants) during the third and fourth quarters.

• Microsoft dominated the leasing on a national basis,

supplemented by Bytedance (Tik Tok) and Facebook in

Northern Virginia, and Cloud HQ, Aligned and Digital Realty

Trust were the beneficiaries of this leasing.

• The strong leasing activity during the second quarter stemmed

from hyperscale companies, as many of these tenants pulled

forward their requirements as a result of the distributed work-

force and the work-from-home lifestyle.

• In addition to remote work, online gaming, social media, video

streaming, and ecommerce all drove leasing activity during the

pandemic.

• An uptick occurred in enterprise, and hyperscale users focused

on their carbon footprints. Data center operators matched this

by increasing their use of renewable energy.

• Tenants increasingly are finding landlords more receptive to

porting some of their load once again giving operators with

multiple footprints advantage to the one offs.

• Under construction numbers for the first time surpass space

available as noted in graph, mostly driven by Northern Virginia

as NOVA supply was significantly higher last year.

• Several of the third-party data center operators reported the

repatriation of enterprise users from the cloud.

• Much of the enterprise’s leasing took place in the first quarter,

before the pandemic slowed down its leasing. Expect the

leasing activity for those users to pick up during 2021, after

they overcome the logistics of acquiring new sites.

• Chicago had its strongest year during the past three years with

more than 45 MWs leased by Microsoft and in 2021 they will

have more than 400,000 square feet under construction in the

suburbs. Downtown also had strong leasing, led by QTS.

Furthermore, Skybox and Stream have acquired properties to

expand.

• Other notable markets in 2020 was the Bay Area led by

Microsoft and Atlanta had success that benefitted primarily

QTS. Activity in Phoenix was driven by Oracle and Microsoft.

• Dallas continues to struggle landing hyperscale coupled in

2020 with lack of enterprise leasing.

• Overall one-off investment activity slowed down due to the

pandemic. However, a significant increase in volume occurred.

• During 2020, several mergers with fiber and data centers as

well as acquisitions with low cap. rates have once again

reemphasized the importance of connectivity.

• A significant increase in capital from insurance companies,

pension funds, sovereign funds, and traditional real estate

investors, coupled with the reallocation of capital from other

real sectors, will lead to a dramatic decrease in the cap. rates

in 2021. The strategies are as diverse as the investors

themselves, and, in general, they have not created a surplus.

• 14 data center properties have been traded twice during the

past 4 years. The average hold time was 2.7 years, and the

average nominal return was 89%.

• There has been an increase in investors becoming comfortable

with shorter-term leases; most of the publicly traded

companies report a 7.25-year average term length.

• Merger and acquisition activity should remain strong in 2021 due to the aforementioned, as well as private equity firms exiting their mature investments.

Overview of Issues Impacting Data Centers in 2020

Jim Kerrigan,SIOR | Managing Principal | jim.kerrigan@nadatacenters.com

2020 Datacenter Leasing by City 2020 Datacenter Leasing by Provider

Data Center Real Estate Review: 2020

Historical Data Center Inventory

Investment Activity 2020 Buyer Seller Date Size SF Market Sales Price Comments

Colony Capital Databank 1/20 various $185 MM 17.5 X EBITDA

MapleTree Digital Realty 1/20 381,387 Aurora, CO $97.42 MM Flexential leases 171,289 sf 6.63% Cap. Rate

Landmark Dividend Paypal 2/20 134,856 Phoenix, AZ $122 MM Partial Sale/Leaseback - 7% Cap. rate

Digital Realty Clise Properties 2/20 400,000 Seattle, WA $305 MM 5.7 % Cap. Rate, Exp. Ownership from 49%

Landmark Dividend Individual 4/20 61,080 Louisville, KY $7.35MM Flexential leased

Harvest Properties CIM Group 4/20 105,800 San Francisco, CA $99MM Carrier Hotel SOMA(95% leased)

Alliance Consolidated MVTC, LLC 6/20 35,908 Marietta, GA $5.95 MM Sagenet 100% -15yr. 7.5% cap. rate

Liberty Mutual Microsoft 6/20 72,593 Redmond, WA $15.3 MM Partial short term sale/leaseback

Equinix Bell Canada 6/20 1,600,000 Various $780 MM 25 properties - 15X EBITDA

Landmark Dividend C.H. Robinson 7/20 32,000 Oronoco, MN $5.5 MN CH Robinson sale/leaseback - 5yr

Colony Capital Vantage 7/20 1,400,000 Various $3.5 BN Recapitalization @ 20x EBITDA

SBA- Edge MetroLofts LTD 7/20 277,334 Jacksonville, FL $24.9 MM JaXNap

Rhino Capital LLC Conguity 360 7/20 199,902 Fall River, MA $15.45 MM Sale/leaseback - 10 year lease

Edgeconnex EQT 8/20 Various $3.4BN 40 properties @ 24 x EBITDA

Landmark Infrastructure Hillcorp 9/20 138,000 Lansing, MI $52.5 MM 3 property NNN LiquidWeb

Landmark Infrastructure Sungard 9/20 82,617 Mississauga, ON $28.83 MM Sale/leaseback

Landmark Infrastructure Sungard 9/20 134,574 Smynra, GA Sale/leaseback

Databank zColo 9/20 1,100,000 Various $1.4 BN 44 properties - 14x EBITDA

Stonecourt Capital CHIRISA 10/20 230,000 Various 12 properties 22MW

T5 Data Centers Apple 10/20 128,566 Newark, CA $60 MM Former facebook - 17MW

Harrison St/1547 Ascendant 10/20 132,000 Milwaukee, WI $7.25 MM 15 story carrier hotel

Landmark Infrastructure Altus Group 10/20 88,000 Champaign, IL $13.4 MM Amdocs leased

Blackstone COPT/GI 11/20 1,300,000 Ashburn, VA $293 MM (6) NNN Powered Base Shells

Harrison St / 1547 Alco Investment 12/20 302,262 Portland, OR $326 MM Carrier Hotel

This graph depicts turn-key space that is currently built-out in Multi-Tenant Data Centers (MTDC). This does not contemplate total SF/MW of properties.

Capitalization rates and EBITDA multiples are provided from sources deemed reliable.

Jim Kerrigan,SIOR | Managing Principal | jim.kerrigan@nadatacenters.com

2020 Datacenter Leasing by City 2020 Datacenter Leasing by Provider

Data Center Real Estate Review: 2020

Largest Wholesale Turn-Key Leases in 2020

For the largest wholesale transactions, the numbers set forth represent what is believed to be the total commitment of the lease agreement. Under construction refers to white space being built. These numbers do not contemplate expansions. Information is from sources deemed reliable.

Obsidian Ridge Sonoma Cabernet Sauvignon 2017 (N)

Pahlmeyer Napa Merlot, 2016 (N+1)

Stag’s Leap Napa Fay Vyd. Cabernet Sauvignon 2017 (2N)

Cliff Lede Napa High Fidelity Red Blend 2016 (N+1)

Orrin Swift California Funeral Pyre Red Wine 2015 (2N)

Mount Peak Sonoma/Napa Sentinel Cabernet Sauvignon 2015(N+1)

TENANT MARKET PROVIDER MW

Microsoft(PBB) Franklin Park, IL DLR 192,000 sf

Bloomberg(PBB) Totowa, NJ DLR 150,000 sf

Facebook Ashburn, VA CloudHQ 72

Google Ashburn, VA CloudHQ 60

Microsoft Manassas, VA CloudHQ 60

Bytedance Ashburn, VA Aligned 54

Bytedance Ashburn, VA DLR 52

Microsoft Ashburn, VA DLR 40

Microsoft San Jose, CA Stack 32

Microsoft Sterling , VA CONE 24

Microsoft Ashburn, VA NTT 22

Bytedance Ashburn, VA DLR 20

Microsoft Elk Grove Village, IL Stack 18

Microsoft Elk Grove Village, IL Stream 15

Workday Ashburn, VA Sabey 12

Twitter Atlanta, GA QTS 12

Twitter Hillsboro, OR DLR 12

Oracle Sterling, VA QTS 10

UBER Sterling, VA QTS 10

Rackspace Manassas, VA IRM 9

Bytedance Sterling , VA Vantage 8

Uber Atlanta, GA QTS 8

Microsoft Phoenix, AZ IRM 6

Oracle Phoenix, AZ IRM 6

Microsoft Franklin Park, IL DLR 6

Oracle Phoenix, AZ DLR 6

Oracle Phoenix, AZ CTL 6

Oracle Sterling , VA Vantage 5

NVIDIA Tahoe, NV SWCH 5

TENANT MARKET PROVIDER MW

LinkedIn Hillsboro, OR Stack 5

Uber Ashburn, VA QTS 5

Systems Integrator Ashburn, VA QTS 5

Oracle Ashburn, VA NTT 5

Oracle Ashburn, VA DLR 5

Citadel Somerset, NJ CONE 5

FedEX Atlanta, GA SWCH 5

Workday Atlanta, GA QTS 4.5

Citadel Chicago, IL QTS 4.5

Expanding customer Santa Clara, CA Vantage 4

US Patent & Trademark Manassas, VA IRM 4

Facebook Richmond, VA QTS 3.5

Government Contractor Manassas, VA OFC 3.5

LinkedIn Sterling, VA STACK 3

AWS Manassas, VA IRM 3

Linkedin Dallas,TX DLR 3

Ebay Reno, NV SWCH 3

TBD NYC Sabey 2

Facebook Chicago QTS 2

Playstation Chicago QTS 2

IBM Ashburn, VA NTT 2

Ebay Las Vegas, NV SWCH 2

Deutsche Bank Clifton, NJ DLR 2

IBM Ashburn, VA DLR 2

Microsoft Santa Clara, CA COR 2

Google Los Angeles, CA COR 2

Wells Fargo Chaska, MN Flexential 2

Big Red Wines We Really Enjoyed in 2020