Equinix (EQIX) Invests $34M In 3rd Data Center In Warsaw

Expanding its International Business Exchange (IBX) data-center offering in key emerging markets, Equinix, Inc. (NASDAQ:EQIX) recently announced that it will develop a facility in Warsaw. Known as WA3, this facility is the company’s third data center in Warsaw, scheduled to open in first-quarter 2020.

The company will invest $34 million (nearly €31 million) for the development, adding 475 cabinets and more than 1,400m² of state-of-the-art colocation data-center space in the first phase. The facility will also offer a host of advanced inter-connection services and include latest standards in building innovation, such as a mist system for fire suppression.

Notably, firms have been rolling out digital services and transferring the existing workload to third-party cloud platforms, while reducing costs and delivering consistent performance. Consequently, businesses are demanding increasing levels of inter-connection facilities to accelerate their transformation initiatives.

Hence, by offering these mission-critical facilities, the company is committed toward helping businesses advance their digital edge. Further, Equinix’s latest data center will help global organizations expand their digital operations in Poland. In fact, WA3 will be one of the many builds in Equinix's global platform — Platform Equinix— offering connectivity to customers and partners across digital supply chains.

Moreover, being Eastern Europe's second largest economy, and an important hub of research and development, Warsaw has a rich business ecosystem. This attracts organizations since the firms can directly connect with each other in a secure environment and enhance their performance.

Hence, Equinix's emphasis on the region is a strategic fit. The company’s data centers in Warsaw offer dense network of cloud, and IT services and telecommunications. It has more than 350 customers, 60 cloud service providers and 190 network service providers in the region.

However, setting up data centers requires huge capital outlays, which can affect the company’s liquidity position.

Over the past six months, shares of this Zacks Rank #3 (Hold) company have gained 9.6% compared with the real estate market’s rally of 6.6%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Notably, data-center REITs have been witnessing a boom, with growing popularity of cloud computing, Internet of Things and big data, use of third-party IT infrastructure by several companies, and migration of IT infrastructure to the digital edge. Additionally, the estimated growth rates for the artificial intelligence, autonomous vehicle and virtual/augmented reality markets will remain robust over the next five to eight years. This will significantly propel growth of data-center REITs, such as Equinix, Digital Realty Trust (NYSE:DLR) , CyrusOne Inc. (NASDAQ:CONE) , CoreSite Realty Corp. (NYSE:COR) and others.

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