Grubb & Ellis, a broker of wholesale data center space, recently released their Wholesale Data Center Summary for 2011. Included in their year-end summary is a list of investment activities and general wholesale data center trends for 2011 relative to their own brokerage firm activity.
According to Grubb & Ellis’ summary, their two largest lease deals for data center space during 2011 were Zynga, an online game provider that recently went public, and twitter. The online game provider placed first with the most leased space for 2011 by leasing 9 MW in Santa Clara, CA, which also happened to be one of the strongest markets for wholesale data center leasing activity for the year. Twitter placed second by leasing 8 MW in Atlanta, GA, while Rackspace came in a close third with a 7.9 MW deal in Elk Grove Village, Ill, outside of Chicago.
The greater Chicago area was also a strong locality for wholesale data center leasing in 2011. After having one of the best leasing years ever for data center space, which included 350 E. Cermak being fully leased, Grubbs & Ellis named Chicago one of the “tightest data center markets in the country.”
Other trends included wholesale speculative construction costs being down 15-20 percent due to economies of scale and off-site modular construction; significant uptick in leasing activity between 400kw and 600kw users which further blurred the lines between wholesale and colocation, and the Reid McConnel Tax Act increasing the number of companies spending their own capital to build out space as an alternative to turn-key data center solutions.
Below is a list of data center investment activity for 2011 by Grubb & Ellis in their year-end summar.
- Verizon purchased Terremark for $1.4 B.
- Hines Global REIT purchased Fisher Plaza for $160 M. It is an office,data center and retail campus.DLR bought a 69,000-square-foot SunGard facility in Rancho Cordova,CA for $30 M or a 9 percent capitalization rate.
- Carter Validus purchased a single tenant leased data center in Richardson,TX for $28.9 M or a 8.5 percent capitalization rate.
- In a distressed 100,000-square-foot sale,601 W. Polk Street in Chicago sold to Pi Data Holdings for $10 M. (For more information about the purchase click here)
- Carter Validus is under contract to purchase 180 Peachtree in Atlanta,GA for $94.75 M. The 338,000-square-foot property is expected to close at an 8.2 percent capitalization rate.
- Sabey purchased 375 Pearl St. in for $120 M.
- DLR purchased the Red Sea Portfolio (AT&T –900 Dorothy,Richardson,TX and Verizon –2950 Zanker,San Jose,CA) for $50.3 M.
- CyrusOne purchased its leased facility at 5150 Westway Park Blvd.,Houston,TX.
- There were three power based shells that sold this year.