The new site will be zColo’s first location in downtown Chicago and 13th facility in the U.S., and is expected to come online by the end of the second quarter of 2012. The facility will leverage Zayo’s bandwidth Infrastructure, including its metro fiber network in Chicago and its 44,000-mile national network. The facility will offer a new downtown connectivity option to serve financial industry, media and other internet content customers.

“Industry reports show that growth in demand for data center services in Chicago has exceeded supply by 50% over the prior two years,” states Chris Morley, President of zColo. “As a carrier-neutral provider, we plan to partner with other carriers in the Chicago area to support this demand.”

Earlier this month zColo  announced the acquisition of MarquisNet, a data center in Las Vegas. zColo provides 169,000 square feet of data center colocation space in 13 data centers in New York, Newark, Nashville, Los Angeles, Memphis, Tenn, Plymouth, Minn and three cities in Ohio – Cincinnati, Cleveland and Columbus. zColo reported $38.7 million in annualized adjusted revenue and $13.5 million in annualized adjusted EBITDA in the third quarter of 2011.

The top 10 deals reflect 25 megawatts of leasing in Santa Clara, Calif.,  and almost 14 megawatts of space leased in Elk Grove Village, Ill., a suburb of Chicago. Only two deals outside of those markets made the list: Twitter’s 8 megawatt lease in Atlanta, and a 2.275 megawatt deal by Salesforce.com in Ashburn, Va.

Kerrigan also noted that it’s getting cheaper to develop wholesale data center space. “Wholesale speculative construction costs are down between 15-20 percent due to economies of scale and off-site modular construction,” he writes.

The roundup also provides data on the largest build-to-suit projects this year, and the largest available blocks of wholesale space.  Check out the full writeup at the Grubb & Ellis data center blog.

“Due to Peerless’ rapid growth, our network has grown to include five major POPS in Chicago alone, and the new data center will allow us to consolidate them into a state of the art facility,” said John Barnicle, President & CEO of Peerless. ”We plan to invest nearly $5 million into the new site by the time it opens in the first quarter of 2012.  The new facility will give Peerless much more flexibility to accommodate its rapidly growing customer base by allowing us to quickly add capacity.”

Server Farm Realty has 134,000 square feet of space available for leases in data center suites with flexible sizing starting at 1 megawatt of power. The company is upgrading the building’s electrical service to 40 megawatts   The eight story building  has access to 15 carriers including AT&T, Verizon, AboveNet, 360 Networks, Cogent, Level 3, CenturyLink/Qwest, Zayo, XO, Synesys, Intellifiber, Global Crossing and Paetec.

Server Farm Realty is the data center development arm of the Red Sea Group, an investment group based in Israel. The company is developing new facilities in three markets, and also owns several data centers that are fully leased to a large telecom company. CEO Avner Papouchado has been buying and selling data centers since 1999, taking a few years off after the dot-com bust.

Peerless Network is a privately held company headquartered in Chicago, which currently offers service in Tier 1 and Tier 2 markets in 36 states and over one hundred Local access Transport areas (LATAs).

Chad Freese and Aaron Kulick of CBRE, Inc. represented Server Farm Realty and  Alex Smith of Cushman & Wakefield represented Peerless Network in negotiating the transaction.

A look inside one of the server pods at Server Central's data center in Elk Grove Village, Illinois.

As Jordan Lowe walks the lengthy corridors of a facility near Chicago, it takes time to navigate the expanse of data center space operated by his company, ServerCentral. Deep inside a new section of the building, the colocation and managed hosting company is creating a “monster pod” of data center space, combining two data halls to create a raised-floor environment supported by 2.6 megawatts of power.

When the new space opens in the first quarter of 2012, ServerCentral will operate more than 40,000 square feet of raised-floor space and 5.5 megawatts of critical power within the multi-tenant data center operated by DuPont Fabros Technology (DFT) in Elk Grove Village, Illinois.

That’s a huge change from the days when ServerCentral was running off a server in Lowe’s college apartment. That’s where ServerCentral got its start in 2000, when Lowe was building web sites and seeing huge demand. “We said ‘why don’t we sell servers?’” said Lowe, now the CEO of ServerCentral. “We just grew and grew, and the last couple of years things have exploded.”

The company now operates acres of space filled with servers in several of the world’s largest data centers. ServerCentral is an example of a local company bootstrapping its way to growth in a capital-intensive industry, moving up the value chain in the process to emerge as a significant regional player in the Chicago market. The company has expanded its service offerings along with its data center footprint, and now offers colocation, managed hosting and cloud computing services.

From Domains to Managed Services

In its early years, the ServerCentral grew quickly, boosted by offers that bundled hosting with cheap domains. In 2003, the company leased colocation space with Equinix in downtown Chicago at 350 East Cermak, the immense Internet hub on the shores of Lake Michigan. Within 18 months, it was running 150 racks of gear at Equinix.

The ServerCentral team got into the network services space with nLayer Communications, which owns and operates its own global OC-192 infrastructure. The company also spun off its shared hosting business as Wing Six, which was later acquired by UK2.

In 2009 ServerCentral leased 10,000 square feet of wholesale space in a new data center built by DuPont Fabros Technology (DFT) in Elk Grove Village, Illinois. The company became one of the anchor tenants in the first phase of the facility, serving as the primary retail colocation provider in the building – a status that often results in referrals of customers who may need colo space but not be large enough to lease an entire pod directly from DuPont Fabros.

In August, ServerCentral expanded its space in Elk Grove Village, adding a 2,000 square foot room for high-density cabinets and taking 20,000 square feet of space in Phase II of the building. The company now has 60 employees, with more than half focused on engineering. It also operates colo space in northern Virginia, Amsterdam, Silicon Valley and Tokyo to support international users.

Growth in The Cloud, and the Enterprise

Lowe says ServerCentral is experiencing strong demand, and sees an opportunity in the growth of cloud computing. “We have some interesting cloud ideas,” says Lowe, particularly involving private clouds.

“We think cloud is a complementary technology to our colocation and managed services,” said Peter Berg, ServerCentral’s vice president of sales and marketing. “We think that in the next 24 months, it could be 30 percent of our revenue.” For now, Berg says, colocation inquiries predominate in the company’s sales pipeline.

“We’ve now got some marquee customers,” said Berg. “We’re not just the hosting companies. We’re squarely in the enteprise space. The secret is getting out.”

A look at the cabling in the network connection area inside Server Central's data center.

]]> http://www.datacenterknowledge.com/archives/2011/10/28/servercentral-expands-as-growth-continues/feed/ 2 http://www.datacenterknowledge.com/archives/2011/10/03/facility-gateway-to-develop-chicago-facility/ http://www.datacenterknowledge.com/archives/2011/10/03/facility-gateway-to-develop-chicago-facility/#comments Mon, 03 Oct 2011 14:00:03 +0000 Rich Miller http://www.datacenterknowledge.com/?p=57725 Facility Gateway Corporation has partnered with Pi Data Holdings (PDH) to develop and manage 601 West Polk, a data center and telecom building in downtown Chicago. PDH recently purchase of the building from Ten X Capital Partners.

Facility Gateway and PDH are working to bring more power into the building while expanding existing capacity. The building is situated on the primary fiber optic ring serving downtown Chicago providing the building’s existing tenants  with diverse connectivity.

“Not only does 601 Polk have that rare confluence of power and connectivity, which is scarce in downtown Chicago, but if one needs more than 20,000 square-feet of real estate on a single floor, then 601 Polk is the only building in downtown Chicago that can accommodate that need today,” says Laurance Lewis, President of Corporate Site Selectors, which represented Ten X Capital Partners in the recent sale.

The ownership change at 601 Polk comes shortly after Digital Realty Trust has leased the final chunk of available space at 350 East Cermak, the premier data center hub in the downtown Chicago market. In a recent market update, Grubb & Ellis describes Chicago as “the tightest data center market in the country”

“With an exhausted supply of real estate options in downtown Chicago, our goal for 601 Polk is to refuel those options so that we can accommodate the end users’ demands for more alternatives,” said Jason Perry, COO of Facility Gateway Corporation. “When we found the property during site selection, it was apparent that 601 Polk would be a good investment and development opportunity.”

The building will immediately undergo extensive renovations to its first floor. The 25,000-foot build-out will be supported by Facility Gateway’s experienced Engineering and Installation Division.

Chicago Loop Parking is said to be working with Morgan Stanley and CB Richard Ellis on development options for the garage, which is lightly used when there are no major events along the waterfront. The proposal is in its early stages, and the investors are exploring other possibilities for the space, such as a movie theater or even a car dealership.

A Modular Opportunity?

The Sun-Times article doesn’t get into the details of the proposal. But one option might be to convert the facility into a modular data center, where containers housing servers and power and cooling infrastructure could be rolled into a secure area of the garage. This approach would reduce the up-front capital required, and allow for gradual deployment of new modules.

Data center space has historically been tight in downtown Chicago, but there are several new projects to add more space. Server Farm Realty has purchased the former Northern Trust building at 840 South Canal street in Chicago, and plans to spend $200 million to convert it into a data center. JRM Technology has also announced plans to overhaul 111  East Cermak and establish it as a data center. In the meantime, there’s a dwindling amount of space available at several existing data center properties, including 725 South Wells, the CoreSite facility on South LaSalle Street, and a limited amount of space at Digital Realty Trust’s data center hub at 350 East Cermak.

Meanwhile, the niche for underground data storage has shown modest growth. These subterranean fortresses have strong appeal for tenants seeking ultra-secure hosting that will survive any eventuality – including a nuclear blast. See The Data Bunker Boomlet for more on this trend.

The Ascent CH2 data center in suburban Chicago. (Credit: Tara Wujcik).

Data center developer Ascent Corporation today unveiled cable giant Comcast as the anchor tenant for its new CH2 Data Center in Northlake, Illinois. Comcast has moved into a 27,000 square foot dedicated data center suite, which it will use  to run a range of applications, including systems for customer support and billing.

“We did a nationwide search for data center sites, and narrowed it down to Chicago,” said Simpson Cumba, Director of Data Center Management at Comcast. “We like the model they had here, the Ascent team let us know they could meet our initial timetable.”

Dedicated Suites

CH2 is a 250,000 square foot multi-tenant data center facility offering build-to-suit “Dynamic Data Center Suites” with access and infrastructure that can be customized for customer requirements. Comcast has its own entrance, security access and shipping and receiving area, as well as dedicated mechanical and power infrastructure. The facility uses air economization (free cooling) with a four-foot raised floor, and is expected to operate at a Power Usage Effectiveness (PUE) of 1.3.

Ascent President and CEO Phil Horstmann said the Comcast project has a “pretty aggressive timeline.” Ascent had the space ready for Comcast within 120 days of signing. The tenant has the option of expanding as needed. “One of the things we really like about this data center is that the property offers us the ability to expand in contiguous space,” said Comcast’s  Cumba.

The Ascent project is the most recent entry in the Chicago data center market, which actually consists of two sub-markets – an active market in downtown Chicago consisting primarily of small footprints and highly-connected space coveted by trading operations, and a group of large data center facilities in the city’s western suburbs that offer larger footprints suitable for hosting and Internet companies. Demand has historically been very strong in the downtown market, while space in the suburbs has taken longer to fill.

Enterprise Demand in the Suburbs

Horstmann sees it somewhat differently. Ascent’s first enormous Chicago-area property, CH1, was quickly leased to Microsoft Corp. to serve as an enormous container data center. Now, with one tenant in place at CH2 and a second customer currently being installed, Horstmann says demand seems fine to him. He differentiates between large facilities optimized for Internet and hosting companies (like CH1) and the company’s approach to CH2.

“Suburban Chicago has always been criticized as being overbuilt,” said Horstmann. ” I’ve always contended that that’s only one type of space. We’re really targeting the enterprise user. What we’re trying to do is bring the advantages of hyper-scale computing and its economics to enterprise users. Chicago is a huge market, with amazing latency to the east and west. With this product, we can turn a lot of different dials.”

Headquartered in Saint Louis, Ascent specializes in advanced mission critical facilities and offers clients a broad range of delivery models spanning shell & core, build-to-suit, turnkey, and outsourced critical systems operations. Ascent’s clients include Fortune 500 firms, and service providers.

Comcast and Ascent held a "cable cutting" to mark the opening of the new data center. Pictured are, from left: Mark Gogots, Senior Technical Project Manager for Comcast; Simpson Cumba, Director , Data Center Management for Comcast ; Mike Crisafulli, Vice President, Information Technology for Comcast ; Mayor Jeffrey Sherwin of the City of Northlake; LeAnn Talbot, Regional Senior Vice President for Comcast; and Phil Horstmann, President and CEO of Ascent.

Steadfast, which offers colocation and dedicated hosting services for “transaction-intense” customers in the financial and gaming sectors, now leases two floors at 725 South Wells for a total of 13,600 square feet. The company is also a significant tenant at 350 East Cermak, Chicago’s largest data center hub, where it operates 17,000 square feet of space, as well as office space for its corporate operations.

The Steadfast expansion at 725 South Wells leaves the site with about 2.5 megawatts of power (24,400 square feet) available for lease. the building is owned by Digital Capital Partners LLC and being marketed by Grubb & Ellis’ National Data Center Practice.  Here’s a video overview of the building:

“Data centers have become the Chicago region’s biggest ComEd electrical customers, replacing the steel mills of a decade ago,” writes Sandra Guy of the Sun-Times. “And they are attracting two precious resources: Hard-to-get private-equity money to finance their construction, and young people intent on developing technology success stories to rival Groupon.”

While providing a high-level view of the Chicago market, the story doesn’t mention the presence of the commodity markets as a major demand driver for data center space downtown, where investment companies, trading firms and hedge funds seek space to house low-latency trading operations.

The National Data Center Practice of Grubb & Ellis recently published an overview of leasing activity in the greater Chicago market. “Downtown Chicago is one of the tightest wholesale markets in the country, whereas the suburban market is much softer due to new projects by  Corelink, Latisys, and Ascent and Phase II of DuPont and Equinix,” wrote Jim Kerrigan of Grubb & Ellis, who said is only one wholesale POD available for immediate occupancy in downtown Chicago.

See our Chicago Channel for additional stories about the Chicago data center market.

“This data center expansion enables Steadfast to provide our customers with a complete suite of services,” said Karl Zimmerman, Founder and CEO of Steadfast Networks. “We offer companies in the financial services and trading industry a compelling value proposition: our services decrease their capital expenditures while also reducing the workload of their internal IT teams, whether they work with Steadfast just on specific projects or outsource their entire IT department to our team.”

Steadfast Networks was founded by Zimmerman in 1998. The company focuses on “transaction-intense” hosting for the financial, and gaming sectors, and just completed a second Chicago data center at 725 S. Wells Street. Last year Steadfast expanded into the New York market and now operates a carrier-neutral new facility at 121 Varick Street in Manhattan.

Digital Realty Trust (DLR) has one pod of Turn-Key Datacenter space remaining at 350 East Cermak, as well as a pod at its other downtime facility at  600-780 South Federal.  The Turn-Key Datacenter program offers customers finished ”plug and play” raised-floor data center space, which shifts the data center development costs from the tenant to the landlord, and allows for much quicker deployment than if the customer built a new facility on its own.