Digital Realty Expands Northern Virginia Footprint With $3.5 Billion Acquisition From Blackstone

Key Takeaways

• Digital Realty is acquiring Blackstone’s blended 64% stake in three fully leased Northern Virginia data centers for $3.5 billion.
• The 288MW portfolio strengthens Digital Realty’s hyperscale capacity during a period of accelerating AI and cloud demand.
• Long-term leases, projected stabilization timelines, and rising hyperscale requirements position the assets for multiyear revenue visibility.

Digital Realty moved to deepen its presence in Northern Virginia through a $3.5 billion agreement to acquire Blackstone’s blended 64% equity stake in three fully leased hyperscale data centers. The deal, announced this week, covers facilities totaling 288MW of IT capacity across two sites in Manassas and one on the Digital Dulles campus in Sterling. The acquisition expands capacity as demand for cloud and AI infrastructure increases regional power and real estate requirements.

According to Synergy Research, global hyperscale capacity crossed 1,000 sites in 2023, with Northern Virginia remaining the world’s largest single market by installed power capacity. The $7.8 billion asset valuation, which implies an initial stabilized cap rate above 6.5% based on Reuters reporting, reinforces the high capital requirements of hyperscale facilities.

The portfolio at the center of this transaction includes three 96MW buildings that are 100% leased to separate investment-grade hyperscale customers. Digital Realty said it would pay $1.2 billion in cash and provide $2.3 billion in shares to Blackstone. The company is acquiring Blackstone’s 80% interest in two of the Manassas data centers and its 50% stake in the Sterling facility. These interests were held through the Digital Carver Dulles 9 and Digital Carver Brickyard joint ventures. Completion of the purchase is expected this week.

Global colocation and interconnection revenue is projected to reach roughly $90 billion to $100 billion by 2027, according to Gartner. Much of that growth is tied to the scale-out needs of AI training clusters and cloud services. Digital Realty, along with peers like Equinix and CyrusOne, has been expanding capacity near major cloud hubs because more than 80% of new demand in top U.S. markets stems from hyperscale customers. CBRE has pointed to AWS, Microsoft Azure, and Google Cloud as primary drivers of this trend.

Digital Realty's chief investment officer described the acquisition as the next phase of a broader relationship with Blackstone. The companies continue to collaborate on joint ventures not only in Northern Virginia but also in Paris and Frankfurt. This highlights the value of having a ready pipeline of fully leased hyperscale assets tied to long-term customer commitments. The sites in this deal are backed by 15-year leases with a blended AA minus credit rating and 3.6% annual rent escalators. Those characteristics appeal to institutional investors seeking predictable returns.

Global data center capital spending is projected to rise at an 11% to 12% compound annual growth rate through 2027, according to IDC. Operators have been racing to secure land, power, and long-term customer contracts. Northern Virginia, with its dense fiber networks and reliable utilities, is widely viewed as irreplaceable. This rapid build-out directly affects enterprise interconnection strategies as cloud providers prioritize new AI clusters.

Two of the facilities Digital Realty is acquiring are expected to stabilize in the first half of 2027. The third is projected to stabilize in the first half of 2028. Stabilization timelines directly influence cash flow visibility and debt planning, as long-term leases begin contributing fully to operating income. Digital Realty is also expanding its strategic private capital platform to demonstrate asset performance to external capital partners.

Blackstone’s digital infrastructure leaders praised the early success of the joint venture originally established in 2023. Demand for digital infrastructure continues to exceed initial expectations, and the ongoing appetite for hyperscale development reinforces the broader market trajectory.

From an operational standpoint, facilities in this class commonly align with Uptime Institute Tier Standards for availability and redundancy, as well as ISO/IEC 27001 for information security management. Enterprise IT teams pay attention to these designations since they influence service consistency and security configurations. The underlying technical consistency of these sites enables reliable long-term planning for enterprise cloud migrations and AI workloads.

While Northern Virginia navigates debates about land use, power availability, and community impact, it remains a primary focal point of U.S. data center expansion. The transaction indicates that regional demand is strong enough to support multibillion-dollar acquisitions tied to long-horizon leases. Digital Realty’s purchase also signals confidence that hyperscale customers will continue to anchor new capacity in the area.

The transaction places Digital Realty in a stronger competitive position as it balances organic development with strategic asset purchases. It also reflects how asset ownership strategies are evolving as AI and cloud computing reshape both enterprise infrastructure and the economics behind it. The financial scale, location, and tenant commitments indicate that hyperscale capacity in Northern Virginia remains a core priority for operators and investors alike.