Element Critical Acquires Data Centers in Chicago Suburbs

Data center provider Element Critical is expanding into the Chicago market with the acquisition of two data centers in suburban Wood Dale, Illinois, the company announced today. The deal provides a third market for Element Critical, which currently has operations in Silicon Valley and Northern Virginia.

Element Critical, previously known as Central Colo, is an expansion-minded data center provider backed by global investment firm Safanad Capital and private equity firm Industry Capital. The company serves smaller deals in big markets, focusing on enterprise customers.

The two data centers the company has acquired in Chicago encompass 195,000 square feet of data center space. Wood Dale is in the suburban Chicago market, 17 miles west of downtown Chicago and two miles from O’Hare International airport. Element Critical did not identify the seller, but Sungard Availability Services is listed as operating two facilities in Wood Dale.

The data centers feature 111,000 square feet of raised floor and up to 15 megawatts of available power capacity.

“Element Critical is building a world-class data center platform and Chicago is the natural next step in our national expansion strategy,” said Ken Parent, CEO of Element Critical. “We are investing more than $40 million to develop and enhance the Wood Dale facilities to immediately provide customers with strategic, customized, and flexible colocation solutions.”

“We’ve looked at this market for a while,” said Jason Green, Chief Technical Officer of Element Critical. “It was a challenge to find the right facility for us and for our customers. Our value proposition is rooted in solution engineering where we go beyond just space, power and cooling. We’re not just running head-long after multi-megawatt deals. We’re here to support to 300 to 500 kilowatt requirements.”

Building A National Presence

With the Chicago expansion, Element Critical now operates four data centers across three major markets – Silicon Valley, Northern Virginia and Chicago – spanning nearly 500,000 square feet of data center space.

Parent, who was previously CEO of ByteGrid, sees the opportunity to build a national platform of data centers by using a sale/leaseback strategy to buy facilities with existing tenants and available expansion space. The addition in Chicago builds on this national vision.

“It gives us another market in the center of the US, and another time zone,” said Parent. “There’s a lot of enterprise customers in Chicago, and bunch of sub-megawatt demand there.”

The newly-acquired Element Critical CH1 data center in Wood Dale, Illinois. (Photo: Element Critical)

Parent says Element Critical will continue to look for opportunities to expand through acquisitions of existing data centers, with the backing of Safanad and Industry Capital.

“From a capital perspective, we’re fortunate to have financial backers who will support our growth and support an acquisition strategy,” said Parent. “We expect to be growing two to four sites per year.”

Active Period for Chicago Deals

The announcement caps a busy several weeks for data center transactions in the Chicago market, following on the announcement of two other deals:

Last week CIM Group and fifteenfortyseven Critical Systems Realty (1547) acquired a data center at 725 South Wells in Chicago’s business district. The 66,000-square-foot facility was purchased from Digital Capital Partners, a wholesale data center provider. The building has 5 megawatts of capacity.
On Monday, New Continuum said that it has acquired its flagship data center at 603 Discovery Drive in West Chicago, Illinois. The company has been leasing the site since 2013, and was supported with financing by Post Road Group, a leading real estate bridge lender

In mid-December CIM and 1547 announced the latest in a series of joint projects with the acquisition of 725 South Wells, a nine-story building housing 42,000 square feet of data center space. The deal follows the July 2018 acquisition of the 230,000 square foot Midway Technology Centre on Chicago’s South Side. The CIM and 1547 partnership has also purchased data center properties in San Francisco, Toronto, and Cheyenne, Wyoming.

A data hall within 727 South Wells in Downtown Chicago. (Photo: DCP)

“This established facility adds to our growing portfolio of data center properties that we believe will serve both existing technology and enterprise tenants as well as new customers,” said J. Todd Raymond, CEO of 1547. “With this new facility we will have the ability to provide customers of both of our Chicago facilities with access to a dense network of fiber providers and trans-continental connectivity to support their evolving business needs.”

New Continuum began leasing its West Chicago the property in the fall of 2013 when it began a redevelopment project for the building. The company opened a multi-tenant data center in 2015, and added cooling capacity in the summer of 2018. Leveraging the rich infrastructure of the existing facility, New Continuum has focused on adopting new technologies in multi-tenant data center services.

“This is a major milestone for New Continuum,” said Eli Scher, founder, Chairman and CEO of New Continuum. “When we began this re-development project, it was always our objective to eventually own the underlying real estate asset as well. With this transaction completed, we can now begin the next chapter in New Continuum’s evolution as an owner and operator of this critical data center.”