QTS Expands Atlanta Campus to Support 12 MW Hyperscale Deal

QTS Realty has signed a 12-megawatt lease with a hyperscale customer, which will become the anchor tenant in a new data center building on the company’s Metro Atlanta campus.

The deal is a notable win for QTS, and a shot in the arm for the hyperscale ambitions of the Atlanta region, which is the focus of new development by several providers specializing in large-footprint wholesale data centers.

The Atlanta deal involves an existing “strategic hyperscale customer,” and will be delivered in a new 250,000 square feet on the QTS Metro campus. The customer is refocusing some of its capacity, and is exiting a 4.5 megawatt lease in the QTS Richmond data center campus, and leasing 12 megawatts in Atlanta.

The Atlanta expansion caps a strong quarter fore QTS, which also signed a 10-megawatt lease with a hyperscale customer in its QTS Ashburn data center and a 500 kW deal with a hyperscaler in its facility in Piscataway, New Jersey.

QTS  expects to deliver the 6-megawatt first phase of the new Atlanta development in mid-2020, and says the building will eventually scale to 72 megawatts of commissioned power. QTS says its primary Metro data center – a massive 970,000 square foot building with 500,000 square feet of finished space – is “near fully occupied.” The site feature 250 customers, 2,000 cross connects and access to more than 200 network, IT services and cloud providers.

In recent years QTS has acquired 76 acres of adjacent land in Atlanta, which can accommodate several new data centers. The site includes a QTS-owned substation providing 120 megawatts of power, which QTS says can deliver a cost advantage on electricity.

“Witnessing the immense development and growth of the community surrounding our downtown Atlanta data center site over the past decade has been extraordinary,” said Chad Williams, Chairman and CEO of QTS Realty. “We look forward to continuing to work in close partnership with community leaders to further define Atlanta as an important destination for leading hyperscale technology companies and enterprise customers.”

Atlanta has been a hot market for data center development in recent years, seeing new projects from providers targeting the enterprise market, as well as a healthy stream of sale-leaseback transactions. New developments include:

• Switch has announced plans to invest $2.5 billion to build more than 1 million square feet of data center space in Douglas County. The first phase is expected to come online shortly.
• Cyrus One is building a 44-acre campus in the Atlanta suburb of Douglasville, that will house 440,000 square feet of data center space.
• Facebook is investing $750 million to create a hyperscale campus in Newton County, east of Atlanta.
• Flexential has opened a new data center in Alpharetta, north of Atlanta, with 175,000 square feet of space.
• DataBank has launched an innovative new data center in Downtown Atlanta, which houses a supercomputer and advanced computing lab, and will reuse of server waste heat and include a microgrid to provide access to multiple sources of energy.
• Digital Realty, the world’s largest data center landlord, has expanded its presence downtown by adding 18,000 square feet of raised-floor colocation space in 250 Williams, a multi-tenant data center facility in downtown Atlanta.

Some analysts have questioned whether there was enough leasing to support the new capacity. In the first half of 2019, there was 2.8 megawatts of multi-tenant data center leasing in the Greater Atlanta market, according to datacenterHawk, with a vacancy rate of about 12 percent.

The QTS hyperscale deal will help address those concerns. In addition, the fact that a large user is shifting capacity from Virginia to Atlanta will be of interest to market watchers, as Atlanta is positioning itself as an option to the huge data center cluster in Northern Virginia.