Terremark Delays Santa Clara Project

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Terremark (TMRK) has decided to delay construction on its planned data center in Santa Clara, Calif., saying it will instead focus its development budget on its booming business at its data fortress in Virginia, the NAP of the Capital Region.

Terremark’s planned expansion on Corvin Drive is the second major data center project in Santa Clara sidelined by capital constraints related to the credit crunch. DuPont Fabros Technology (DFT) halted development of a $270 million data center in Santa Clara in October after it was able to borrow less than it hoped to fund the project.

The postponements are likely to mean a tighter market for data center space in Santa Clara, which has been the busiest area in Silicon Valley due to low power rates from the local utility, Silicon Valley Power. While there is no immediate space crunch, the mothballing of the two projects eliminates at least 200,000 square feet of data center space that was to arrive in 2009 .

Terremark’s decision will leave fewer choices for companies seeking substantial chunks of data center space in Santa Clara. The only new inventory slated to come on the market in the city in 2009 is a project being built by CRG West. The 50,000 square foot first phase of the three-building campus is scheduled to be finished in the fourth quarter of 2009. Of existing inventory, Digital Realty Trust (DLR) has wholesale data center space remaining in two of the seven buildings it owns in Santa Clara. 

Both Terremark and DuPont Fabros (DFT) say they remain enthusiastic about Santa Clara, and hope to eventually complete their projects. ”This is in no way a reflection of the Santa Clara market, but a decision to manage our capital efficiently,” said Terremark CEO Manuel Medina.

Terremark has chosen to focus its capital budget on building additional space at The NAP of the Capital Region. The company reports strong demand for colocation and managed hosting services at the Culpeper, Va. facility, which is positioned to win additional business if the Obama administration’s stimulus measures are passed.       

“There’s no question that if the capital markets were different, we would go ahead with both projects,” said Medina. “The Santa Clara market is very, very active. We have a nuymber of customers lined up (for the expansion space), and our team in Santa Clara is anxious to get going. Our data center there is full. We have great customers and a great backlog, but we don’t want to do anything to give us any discomfort with our liquidity.”

Terremark paid $12.25 million to acquire 2970 and 3000 Corvin Drive, two properties adjacent to an existing Terremark data center at 3030 Colvin Drive. The 3.05 acre properties include an existing 67,000 square foot building.

DuPont Fabros announced in October that it would suspend construction on a planned $270 million project in Santa Clara, which was to feature two 360,000 square foot data center buildings with a power capacity of 72 megawatts.

About the Author

Rich Miller is the founder and editor-in-chief of Data Center Knowledge, and has been reporting on the data center sector since 2000. He has tracked the growing impact of high-density computing on the power and cooling of data centers, and the resulting push for improved energy efficiency in these facilities.

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