Digital Realty Trust (NYSE:DLR) is seeing early signs that agentic artificial intelligence workloads are expanding demand for interconnected data center capacity, with Chief Financial Officer Matt Mercier pointing to record activity in smaller deployments, cross-connects and related connectivity products.
Speaking at an RBC communications infrastructure session, Mercier said agentic AI remains in its “early innings,” but Digital Realty has seen an increase in diverse deployments in its 0-1 megawatt business. He said those customers are increasingly using interconnection services, including cross-connects, ServiceFabric and bulk fiber offerings.
AI Workloads Drive Larger Requirements
Mercier said inference and agentic AI workflows are increasing space and power requirements in Digital Realty’s highly connected facilities. Deployments that historically averaged 300 kilowatts or less are increasingly exceeding 500 kilowatts to 1 megawatt, while 1-5 megawatt requirements are becoming more common among enterprise and service-provider customers.
The company is also seeing higher demand for bulk fiber as customers seek to connect training-oriented facilities with denser, carrier- and telecom-focused sites. Mercier said this trend is helping bring training deployments into Digital Realty’s interconnected campuses in Chicago and other global markets.
Capacity Pipeline and Power Constraints
Mercier said Digital Realty has 3 gigawatts of operating capacity and 1.4 gigawatts under development, which he said could expand the portfolio by roughly 50% over the next two years. The company also has 7 gigawatts of land capacity that it expects to bring online over the next two to five years or more.
Of that land capacity, approximately 3.5 to 4 gigawatts has energy service agreements in hand, according to Mercier, while the company works to secure power for the remainder. He acknowledged that obtaining power and related capacity has become more difficult, even as industry demand remains strong.
“There’s never been a better time to be in this industry, but it’s never been probably harder in terms of bringing on power and related capacity,” Mercier said.
He said the company’s prior investments in capital, land and power procurement have positioned it to pursue continued growth. Mercier said Digital Realty delivered what he characterized as 10% bottom-line growth last year, expects to do so again this year and expects that trajectory to continue for several years.
Supply Constraints Support Pricing
Mercier said tighter data center supply conditions, including regulatory constraints in some markets, are contributing to stronger pricing. He pointed to Europe and Singapore as markets that have faced capacity constraints for years, while noting that similar pressures have become more visible in the United States.
According to Mercier, pricing has increased across most of the company’s global markets, beginning several years ago in Northern Virginia. He said the company has seen improvement in new-signing pricing, development yields and renewal spreads.
Digital Realty recorded renewal spreads above 60% for contracts greater than 1 megawatt in the latest quarter, Mercier said, while renewal spreads were also “very healthy” in the 0-1 megawatt category. He added that expiring rents over the next several years are trending downward relative to market rates, which he expects to rise amid inflation, interest-rate trends and favorable supply-demand conditions.
Capital Strategy, Neoclouds and Regional Demand
Mercier said all $1.4 billion of the company’s signings in the first half of 2026 came from investment-grade, traditional hyperscale customers. Digital Realty has taken a cautious approach to neocloud exposure, he said, although it has pursued some smaller, more interconnected neocloud workloads in gateway facilities.
The company has sought to broaden its capital sources while reducing leverage, Mercier said. He noted that Digital Realty expanded its private-capital business through joint ventures and launched its first closed-end fund last year, raising more than $3 billion of equity capital. He also cited a recent CHF 600 million Swiss bond offering with a 2% coupon.
Mercier said the development pipeline has shifted toward the United States from Europe because of the scale of AI and cloud deployments, though the company continues to develop in Europe, the Middle East and Africa and Asia-Pacific. He described Asia-Pacific as relatively receptive to AI growth and said Digital Realty has expanded in Johor, Malaysia, and continued transactions in Japan.
On regulatory uncertainty and local opposition to data center development, Mercier said the company does not currently plan to reduce its pipeline. He cited Digital Realty’s presence in more than 50 global markets and its customer base of about 6,000 customers as factors supporting demand diversification.
About Digital Realty Trust (NYSE:DLR)
Digital Realty Trust, Inc is a real estate investment trust that owns, operates and develops data centers and related digital infrastructure. The company provides facilities and technology environments that support the computing, storage, networking and connectivity needs of enterprises, cloud service providers, telecommunications companies and other organizations.
Through its PlatformDIGITAL platform, Digital Realty offers data center colocation, interconnection and hyperscale data center solutions.
