From Real Estate to Hybrid (Real Estate + Tech) How Public Markets Reprice Data Center REITs

Abstract

This thesis investigates the evolving pricing identity of U.S. listed data center REITs from 2015 to 2025. Data centers occupy an ambiguous position in public markets: they are structured as real estate investment trusts yet increasingly perceived as technology infrastructure. This study asks whether public market pricing reflects this ambiguity and, if so, how the pricing relationship has changed over time. Using weekly return data for a two-constituent data center REIT basket (Equinix and Digital Realty), an equal-weight REIT benchmark excluding data centers, and two technology equity ETFs (XLK and SMH), the analysis employs three complementary methods: 52-week rolling correlations, regime-level two-factor identity regressions with Newey-West standard errors, and rolling two-factor betas. The sample is partitioned into four regimes aligned with macroeconomic conditions: pre-COVID baseline (2015–2019), COVID shock and aftermath (2020–2021), rate-hike stress (2022–2023), and post-hike period (2024–2025). The findings reveal a pronounced identity shift. In the baseline regime, data center REITs exhibited strong REIT alignment and near-zero technology exposure, consistent with traditional real estate pricing. During 2020–2021, REIT alignment collapsed while technology alignment emerged under the broad tech proxy, though not under semiconductors. Post2022, a hybrid identity crystallized: both REIT and technology coefficients became positive and statistically significant across proxy specifications. Rolling estimates confirm that this hybrid structure is persistent rather than episodic. The results contribute to understanding how public markets classify assets with hybrid characteristics. The shift from REIT-only to hybrid pricing identity suggests that investors increasingly view data center REITs through a blended real estate and technology lens, with implications for benchmarking, portfolio construction, and the organizational boundary between operating platforms and property ownership. The pricing identity of listed data center REITs has evolved from predominantly real estate to a durable hybrid of real estate and technology.