Chicago – Tightest Data Center Market in the Country

National Highlights

  • As indicated at the end of 2010,the Reid-McConnell Tax Act has driven data center activity around the country with many tenants focused on the powered shell properties and incurring the capital expenses rather than interested in turn-key real estate solutions.
  • Chevron,Disney and Walgreens are a few of the companies that took advantage of the legislation during the first-half of 2011 for their new projects.
  • Wholesale lease transaction activity has been strongest in Santa Clara,Calif. and in suburban Chicago. The tenant composition has been less enterprise users and more Web 2.0 companies including,Zynga,Groupon and Server Central amongst others.
  • One of the biggest questions . . . →Read More:Chicago – Tightest Data Center Market in the Country

Chicago Update

National Highlights

  • Data center construction activity increased by $8 billion from 2009 to 2010  according to International Data Corporation.
  • The streamlined construction processes and economies of scale enjoyed by large developers have resulted in a significant decrease in construction costs on newer projects.  Combined with steady rental rates,this trend has resulted in higher return for developers.
  • While existing wholesale tenants expanding their footprints have dominated leasing activity,  there is significant activity from large enterprise users looking for new requirements.

Spotlight:Metro Chicago

  • Downtown Chicago is one of the tightest wholesale markets in the country,whereas the suburban market is much softer due to new . . . →Read More:Chicago Update

The New Speed of Money or “What is New York Four?”

A couple of days ago the NY Times published an article titled:“The New Speed of Money,Reshaping Markets.”  The article touches on a lot of the things we have mentioned in our blog regarding high frequency trading (see High Frequency Trading and the NYSE’s Data Center).

We have had several people ask us,what are these data centers that are referred to as “New York Four”and simply “Weehawken”in the article. There answer is,that “New York Four”is more commonly referred to as NY4,and it is a colocation data center from Equinix. The facility is about 340,000 sf,and it houses ISE,Direct . . . →Read More:The New Speed of Money or “What is New York Four?”

Chicago (Jun 2010)

National Highlights

  • Expect merger &acquisition activity to continue to increase  and valuations to rise further.
  • Chicago,Phoenix and Northern Virginia have been the two hottest wholesale data center markets during the first four months of 2010,with over 22 mW absorbed.
  • Knowing that tenants lack alternatives due to limited supply,landlords are demanding a 10-20% increase in rental rates for renewals.

Spotlight:Metro Chicago

  • Supply will continue to remain constrained in both downtown and the suburbs as currently none of the potential new buildings have financing or anchor tenants.
  • No new wholesale product has been delivered to the downtown market in 2010.
  • Demand from . . . →Read More:Chicago (Jun 2010)

Chicago (Dec 2009)

National Highlights

  • Supply for wholesale data centers remains tight with the occupancy rate pushing 90%. At this time last year,the occupancy rate was 86%.
  • Companies are beginning to commit to additional space earlier than necessary in anticipation of future supply constraints.  The national sublease vacancy rate is below 1%.

 Spotlight:Metro Chicago

  • The lack of supply in Chicago’s data center market mirrors that of the rest of the country. Through November,there  was approximately 110,000 square feet of wholesale space absorbed in 2009 both downtown and  in the suburbs. 
  • By April 2010,it is unlikely that there will be any Tier 3 wholesale options . . . →Read More:Chicago (Dec 2009)