Total year-to-date returns as of April 17: +19.2 percent.
Two developments have lifted the stocks of publicly-traded data center REITs:
- More e-commerce activity amid the clampdown on bricks-and-mortar shopping.
- Stepped-up telecommuting and distance learning as a result of widespread stay-at-home orders, triggering more video and data traffic.
Data centers “are providing essential services for an economy that is trying to avoid close contact,” says Calvin Schnure, senior vice president of research and economic analysis at Nareit.
Experts say robustness in the data center REIT sector should continue as consumers embrace online shopping over the long term and as remote working and distance learning gain a stronger foothold. In addition, telemedicine has seen a surge in use as health care providers try to limit in-person visits, propelling interest in long-term deployment of this technology.
Additionally, Forbes points out that WiFi-enabled devices like video doorbells and smart refrigerators, along with autonomous vehicles, are increasing demand for data.
Data centers also benefit from their inherent lack of personal contact, meaning they have been able to stay open during the coronavirus pandemic while high-touch businesses have had to temporarily close, Schnure says.
Data centers “don’t have any face-to-face interaction with customers,” he notes. “It’s not like a restaurant, where people are gathering around a table. It’s not like a movie theater. It’s not like a shopping mall.”