Data Center Demand: Will REITs Take Notice?
March 13, 2014

Data center

The world of high technology changes fast. And many corporations that built their own high-tech data centers have found the needed equipment getting smaller, shrinking their footprint and leaving excess capacity.

“I would say that there is a trend in the corporate world of not wanting to operate their own data centers,” Greg Gerber of the commercial real estate services firm Studley tells The trend has developed relatively quickly. “Data centers built just five or seven years ago were generally built larger than most companies’ systems now require.”

As reported in, Gerber helped negotiate the recent $30 million sale of CNA’s 70,000-square-foot data center in suburban Aurora to ByteGrid Holdings LLC, which already operates centers in Georgia, Maryland and Cleveland. The commercial insurance writer’s primary data center was developed in 2008.

Adding these established data centers to the market should further boost the metropolitan area’s high-tech reputation among investors. Chicago has become one of the top cities for data centers, along with New York, San Francisco, Atlanta, Dallas and Washington DC, according to Patrick Davis, a senior design phase manager with Mortenson Construction who specializes in data centers.

“Of all of these cities, we have the lowest vacancy rates in our data centers,” he says, below five percent. And the growing use of computerized medical records, cloud computing and other factors has caused projections for “the demand curve for data centers to just go out of control.”

CNA briefly considered the option of renting out the excess space on its own, Gerber adds. “That was an exercise we went through with CNA when we were brought on, but the idea was quickly dismissed since CNA decided ‘this is not what we do, running a data center is not our core business.’”

By selling the centers, corporations monetize these assets, and ensure the excess capacity gets rented out and administered by true professionals.

“We took the building out to the market and ended up with four solid prospective buyers,” says Gerber, which he considers a sign of strong interest...

Data Center Demand: Will REITs Take Notice?

Related Stories

New Jersey Grabs Data Center Real Estate From New York
Server Farm Buys Oak Brook Data Center