A Fresh Take on CRE

G&E Data Center Group Year End Report

Year End Report


  • Grubb & Ellis Data Center Practice Coverage MapThe Reid-McConnell Tax Relief Act of 2010 should have a significant impact on demand for data center space during 2011. The bill calls for 100-percent bonus depreciation on deduction allowances for investments in new business equipment placed in service between Sept. 8, 2010, and Dec. 31, 2011.

Atlanta

  • There is approximately 5 MW of wholesale data center demand and approximately 19 MW of existing supply currently, with an additional 8 MW proposed for delivery by the end of 2011. There is no new capacity of any significance currently under construction. The major wholesale leases signed this year include two undisclosed deals of 2 MW and 1 MW.

Chicago

  • There is 15 MW of wholesale data center demand in both suburban and downtown Chicago chasing just 7 MW of existing supply, though 18 MW proposed for delivery by the end of 2011 will help to offset that imbalance. The major wholesale leases signed this year have been Rackspace (4.3 MW), Comcast (1.8 MW), and Server Central (1.3 MW).

Dallas

  • There is approximately 40 MW of wholesale data center demand and approx. 24 MW of existing supply currently. There is a total of 16 MW under construction and an additional 15 MW that is proposed for delivery by the end of 2011. The major wholesale leases signed this year include FiServ (4 MW), SoftLayer (6 MW), Morgan Stanley (2 MW), NCsoft (2 MW). Cisco completed a build-to-suit for 8.5 MW.

Los Angeles

  • There is approximately 11 MW of wholesale data center demand with approximately 3 MW under construction. The major wholesale leases signed this year have been Telx (600 KW) and China Cache (300 KW).

Santa Clara

  • There is approximately 50 MW of wholesale data center demand. Unlike previous years, much of this demand will find a home in 2011, as 45 MW (critical load) are slated for delivery during 2011. Of these 45 MW, 10 MW are already pre-leased, which bodes well for an active and potentially record-setting 2011. Although it is unlikely all of the power under construction will be absorbed in 2011, developers are still very bullish on the Silicon Valley and have 75 MW of additional power in the pipeline to keep the area competitive through 2012 and beyond. Two major wholesale leases signed this year were Facebook (5.3 MW) and Zynga (4.5 MW).

Sacramento

  • There is approximately 5 MW of wholesale data center demand and approx. 5.7 MW of supply. The major wholesale leases signed this year have been SunGard (4 MW) and Twitter (2 MW).

San Diego

  • There is approximately 5 MW of wholesale data center demand with approximately 2 to 4 MW under construction.

Manhattan/New Jersey

  • There is approximately 26 MW of data center space either currently available or coming available by the end of 2011 in Northern New Jersey. This reflects over 140,000 square feet of raised floor space. In Manhattan, available quality data center space remains in short supply. Telehouse leased 59,383 square feet at 85 Tenth Ave. and Telx leased 53,291 square feet at 111 Eighth Ave. Leases that took place in New Jersey include: Pfizer (2 MW), Net2EZ (2.275 MW), and Factset (1.14 MW).

Phoenix

  • There is approximately 38 MW of wholesale data center demand with approximately 35 MW under construction for delivery by the end of 2011. The major wholesale leases signed this year have been Boeing (6 MW), and Directv (3 MW).

Virginia

  • There is 50 MW of wholesale data center demand chasing approximately 5 MW of existing supply, though a total of 38 MW currently under construction should serve to offset some of the excess demand. The major wholesale leases signed this year have been Facebook (20 MW), Verizon (5 MW), CSC (1.5 MW).

This year-end report is intended to provide an overall understanding of the supply/demand factors in each in market. Supply is measured in power by the available space that is built and ready for immediate occupancy for wholesale data center space. Proposed supply is Grubb & Ellis’ best conservative estimate of what developers are most likely to secure their funding and will likely be able to deliver fully commissioned wholesale space beyond what has been outlined in under construction. It also does not take into account developers that may use containerized solutions in a particular market. Demand is the hardest number to quantify, as much of the demand in Phase II comes from tenants in Phase I of a particular project and do not necessarily enter the market. In addition, many of the tenants are looking at multiple markets and we have done our best to eliminate this by compiling our lists internally. This does not measure enterprise users seeking build-to-suits or colocation users. Under construction does not take into account pre-leasing.

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