Equinix will expand its data center space at the Lakeside Technology Center, the leading carrier hotel in Chicago, where the company has built a thriving business providing colocation and interconnection services to financial firms. Equinix, which already operates two major data centers within the 1 million square foot building, has leased an additional 19,400 square feet of space from landlord Digital Realty Trust (DLR).
Equinix will use the new space to launch a new offering called IBX Shared Suite. The company has also opened the previously announced expansion of its Chicago 2 (CH2) data center at the Lakeside Technology Center. The expansions will allow Equinix (EQIX) to meet strong demand for colo space from financial trading companies seeking low-latency proximity trading solutions in downtown Chicago area.
The expansions will bring Equinix’s total footprint in the Chicago area to 538,000 square feet, including the three downtown data centers and its CH3 facility in the western suburb of Elk Grove Village.
"The downtown Chicago market is one of our fastest growing markets in the U.S., driven by financial trading companies seeking low-latency proximity trading solutions," said Pete Ferris, Equinix's President, United States. "This agreement helps us quickly meet the growing demand from our customers in Chicago."
Equinix CEO Steve Smith called the expansion “a fortuitous opportunity for Equinix to quickly and cost effectively add to our capacity in downtown Chicago, where our CH1 and CH2 centers are well established as the leading hubs for the proximity trading operations of the region’s leading financial trading companies.” Smith said the financial vertical is "one of the fastest growing segments of our business in 2009.”
Originally developed by the R.R. Donnelley Co. to house the printing presses for the Yellow Book and Sears Catalog, 350 East Cermak was converted to telecom use in 1999. Today it is one of the world’s largest carrier hotels and the nerve center for Chicago’s commodity markets, housing data centers for financial firms attracted by the wealth of peering and connectivity providers among the 70 tenants.
The building was nearly fully leased last fall, when Digital Realty Trust negotiated an agreement to reclaim 120,000 square feetof unused space from Qwest. It has since redeveloped the former Qwest space on the eighth floor as Turn-Key Datacenter space, providing additional inventory in a high-demand market.
Chicago is one of Equinix’s fastest growing markets, with 37 percent year-over-year revenue growth. The company has pursued a two-pronged strategy in the downtown and suburban Chicago markets, with ample space at the CH3 facility in Elk Grove Village for customers seeking larger footprints, while network service providers and financial customers can beenfit from the dense interconnection points at 350 East Cermak.
The IBX Shared Suite will provide additional downtown colo space. IBX Shared Suites will be configured as shared space versus the independent cages that Equinix offers in its traditional IBX centers.
Customers in CH4 IBX Shared Suite will have direct connectivity to the 87 networks, carriers and dark fiber providers in Equinix’s existing Chicago centers, as well as Equinix Financial eXchange, the community of financial trading companies. Current Equinix Financial eXchange participants in Chicago include the Chicago Mercantile Exchange (CME), IntercontinentalExchange (ICE), Deutsche Borse, NYSE SFTI and Trading Technologies.
The CH4 data center will provide approximately 600 additional cabinet equivalents and is expected to open for customers in the first quarter of 2010. Equinix plans to invest less than $10 million of capital expenditures in the CH4 expansion, a savings made possible by its use of Digital Realty's Turn-Key program, which allowed it to lease finished technical space developed by the landlord.
"Equinix and Digital Realty Trust have a long-standing working relationship, and this new data center agreement helps Equinix meet the demand for high-quality datacenter space for its clients," said Joe Goldsmith, Vice President, Channel Sales at Digital Realty Trust. "Downtown Chicago is a key market where datacenter demand is growing and supply is constrained. By leasing our Turn-Key Datacenter(SM) space, Equinix can rapidly go to market with top-quality datacenter space to meet that growing demand."