The action continues in the Chicago market, where T5 Data Centers has acquired a large facility in Elk Grove Village from Forsythe Data Centers, which will continue in place as the anchor tenant.
The deal provides T5 with entry into a new market, as well as significant expansion capacity within an existing Tier III data center. The T5@Chicago facility is the ninth data center for T5, which also operates in Atlanta, Dallas, Los Angeles, Portland, Colorado Springs, Kings Mountain (Charlotte) and Orangeburg, N.Y.
After years of tight supply, the Chicago market is experiencing a building boom, with new market entrants in both the Downtown and Suburban Chicago markets. Elk Grove Village is in the Suburban Chicago (“Chicagoland”) market, located just west of O’Hare Airport. The town is home to a data center cluster that includes facilities for DuPont Fabros and Equinix as well as T5.
“Chicago is becoming an increasingly hot market for reliable data center services,” said Tim Bright, Executive Vice President of Wholesale/Enterprise Markets for T5 Data Centers. “We were fortunate to find an available, operational facility with the data center architecture and quality consistent with T5 data center standards. With this acquisition, we can offer Chicagoland regional customers move-in ready data center capacity, customizable and expandable to meet any need.”
Forsythe came online in June of 2015, and has built out two phases of the building, representing about 40 percent of its capacity. Forsythe will continue to operate as usual with a long-term lease as a tenant of T5, and also gains capital from the sale of the property.
These sale/leaseback transactions have benefits for both parties. The seller gains revenue from the sale of the property, while continuing to benefit from the lease and continued use of its infrastructure. Buyers get rental income from the tenant as well as the “value-add” upside from developing the unused space and filling it with data center tenants. Developers that have pursued this model include ByteGrid, Lincoln Rackhouse and Central Colo.
T5 plans to develop the remaining space in Elk Grove Village for wholesale or build-to-suit data center requirements. The property has an additional four acres adjacent to the building, where T5 says it can develop an additional 28 megawatts of data center capacity.
The T5@Chicago data center has received LEED Gold certification, as well as Tier III certification from The Uptime Institute for both the design and constructed facility. T5 had been managing the 208,000 square foot data center for Forsythe.
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The building features an N+1 electrical and mechanical topology, secure private data halls available from 540kW to 9.0MW, and the ability to easily customize operational controls in each data hall to accommodate each customers’ requirements.
The greater Chicago market is home to more than 1.85 million square feet (SF) of commissioned data center space, representing 210 megawatts (MW) of commissioned power, according to DatacenterHawk, a Dallas-based research firm that tracks the availability of data center space. Demand for space is strong, as reflected in the vacancy rate of just 8.5 percent for the region.
The Chicago data center market appears poised for growth. Leasing was strong during 2015, with net absorption of 27 MW of capacity. This robust leasing has prompted new construction, with up to 200 MW of additional capacity planned for coming years.
For more on the Chicago market, we invite you to download the Data Center Frontier Special Report: The Chicago Data Center Market.