The newly-completed first phase of the Sabey Intergate.Quincy data center in Quincy, Washington. Click the photo for a larger image.

Sabey Data Centers has completed the first facility on its Intergate.Quincy data center campus in Quincy, Washington, just seven months after commencing construction, the company said today.  The first tenant has occupied its space in the 139,000 square foot data center, the initial phase of what will be 520,000 square feet of space in Quincy. Sabey is currently working on tenant improvements for additional customer space.

The Intergate.Quincy campus has 60 megawatts of capacity of hydro-electric power priced at 2.25 cents per kWh, among the lowest-priced power in the nation. Intergate.Quincy is the sister campus to Intergate.Columbia, Sabey’s 430,000 square foot campus located near Wenatchee, Wash.

Building Continues in Quincy

The Sabey campus is the latest in a series of data center construction project in Quincy, a small town in central Washington that benefits from its cheap green power and a climate that’s ideal for fresh air cooling. Microsoft and Yahoo recently completed the first phases of major expansions in Quincy, while Dell and Vantage Data Centers have facilities under construction.

Construction on Intergate.Quincy began in time for the project to qualify for an exemption from Washington state sales tax (a rate of $.079 in Quincy) on purchases of servers and equipment. “Without the tax incentive, this business might have gone out of state,” said John Sabey, President of Sabey Data Centers. “Instead, everyone in the area is benefitting while keeping Washington State globally competitive.”

Sabey is also continuing to expand in multiple markets:

• In Seattle, Sabey is continuing to build at Intergate.East, its flagship, 1.4 million square foot campus in Seattle. Its first “turnkey module,” SDC52, is fully leased and supports 4.5 megawatts of IT load. A second module, SDC42, will be ready for occupancy in December 2011.
• In Northern Virginia, Sabey has begun construction on a 490,000 square foot data center campus in Ashburn, Virginia, one of the nation’s leading data center hubs.
• Sabey has also entered the New York data center market, acquiring the majority interest in 375 Pearl Street for $120 million. Formerly a giant switching station for New York Telephone, the Intergate.Manhattan facility is being updated to install new infrastructure and capacity.

Sabey has more than 20 years of experience in the data center business and is perhaps the largest provider of hydro-powered facilities in the United States. Sabey’s current tenants include Microsoft Corporation, JP Morgan Chase, Savvis, Internap, VMware and T-Mobile.

Recent construction on the Sabey Intergate.Quincy campus in Quincy, Washington (Photo: Sabey Corp.)

Sabey Corp. has received approval from state regulators to install up to 44 diesel generators to supply critical back-up power for its new data center campus in Quincy, Washington. The Washington Department of Ecology issued an air quality permit to Sabey on Aug. 26 for its Intergate.Quincy project.

The approval comes three weeks after the state issued a similar permit to Dell that clears the way for the computer company to install 28 generators in its planned cloud computing data center in Quincy.

Quincy, a small town in a rural section of Washington state, has developed into a major data center hub featuring several of the world’s most advanced and efficient data centers from Microsoft and Yahoo, along with a project for Intuit . Each of the data centers in Quincy uses banks of generators to provide backup power in the event of a utility outage. Diesel engine exhaust is a regulated pollutant, and can be toxic in high concentrations, so state regulators routinely review permits for generators.

Debate Over Generator Health Impact

The growing number of diesel generators in Quincy generated debate last year when Microsoft applied to add more generators for the second phase of its campus in Quincy.   The Ecology department conducted an evaluation of the health risks from diesel engine exhaust particulates, and found that the Microsoft expansion, viewed in isolation, was not likely to impact public health. But the Department of Ecology took the opportunity to seek feedback from area residents, citing the growing concentration of data centers.

After reviewing and approving the Dell and Sabey projects, the state says its is satisfied that the public’s health is not at risk from the generator density in Quincy. Over the last year, the Department of Ecology has issued permits for an additional 95 generators at the Microsoft, Yahoo, Dell and Sabey projects.

“We all generate so much data in this day and age that protecting that data has become critically important in our society,” said Karen Wood, who manages Ecology’s Air Quality Program in Spokane. “Our role is to make sure the generators are run in a way that protects the public’s health and the air we breathe.”

The Intergate.Quincy project has been in the planning stages since 2007. Plans for the Sabey campus call for three data center buildings housing more than 525,000 square feet of space. Buildings A and B will each be approximately 189,000 square feet, and Building C will be 139,000 square feet. Building C is currently permitted and scheduled for completion in the fall of 2011.

The Intergate.Ashburn campus will feature three buildings offering “turn-key” wholesale and powered shell data center products in both multi and single-tenant layouts, the company said. The site will be supported with over 70 megawatts of power.

The expansion in northern Virginia comes just days after Sabey announced plans to enter the New York market with the acquisition of 375 Pearl Street, a 1 million square foot former Verizon central office in Manhattan.

“Ashburn is another critical node in the array of data centers that Sabey is assembling to serve its customer base,” said John Sabey, President of Sabey Data Center Properties. “We are excited to expand into one of the most dynamic data center areas in the world. Ashburn is a prime location that delivers many of the qualities our clients are looking for.

“With campuses in the New York City and Washington DC metro areas, we are significantly enhancing our strategic presence and capacity as a national provider of data centers,” Sabey added.

The new construction will continue the building boom in Ashburn, which is also a major data center hub for Digital Realty Trust, Equinix, DuPont Fabros Technology, Verizon Business and AT&T. The activity in Ashburn is driven by strong demand, which continues to outpace the supply of new space. Digital Realty estimates that there is at last 38 megawatts of data center requirements seeking a home in northern Virginia, compared to 27 megawatts of current supply.

Sabey has more than 20 years of experience in the data center business and is perhaps the largest provider of hydro-powered facilities in the United States. Its properties include the huge Intergate.East and Intergate.West developments in the Seattle suburb of Tukwila and the Intergate.Columbia project in Wenatchee, Wash. Sabey is also building a data center complex in Quincy, Wash. that will be called Intergate.Quincy.

Sabey’s current tenants include Microsoft Corporation, JP Morgan Chase, Savvis, Internap, VMware and T-Mobile.

Sabey has acquired 375 Pearl Street, the former Verizon building at the right in this photo. The Brooklyn Bridge is on the left.

Seattle-based developer Sabey Data Center Properties has entered the New York data center market, acquiring the majority interest in 375 Pearl Street for $120 million, the company said today. Sabey will partner with New York developer Young Woo on the deal to buy the 1 million square foot former Verizon central office building, which will be managed by Sabey and called Intergate. Manhattan.

Sabey will outfit the property with all new core infrastructure while expanding its connectivity prior to opening in early 2012, the company said. Sabey also plans to upgrade the building’s power capacity from the current 18 megawatts to 40 megawatts.

A “Unique Manhattan Asset”

Sitting at a confluence of the world’s transatlantic cable and fiber routes, 375 Pearl Street is a crucial presence as our Sabey Data Center network expands,” said John Sabey, President of Sabey Data Center Properties. “We are bringing a well-respected data center brand to transform this unique Manhattan asset. Twelve months ago we announced our intention to expand nationally; the Pearl Street acquisition is a testament to our confidence in the future of lower Manhattan, the data center industry, and our commitment to our constantly expanding tenant base.”

Sabey’s current tenants include Microsoft Corporation, JP Morgan Chase, Savvis, Internap, VMware and T-Mobile. The company said it expects that many of Sabey’s existing customers to be actively interested in space at Intergate.Manhattan.

Sabey has more than 20 years of experience in the data center business and is perhaps the largest provider of hydro-powered facilities in the United States. Its properties include the huge Intergate.East and Intergate.West developments in the Seattle suburb of Tukwila and the Intergate.Columbia project in Wenatchee, Wash. Sabey is also building a data center complex in Quincy, Wash. that will be called Intergate.Quincy.

Former Verizon Switching Facility

375 Pearl Street is a 1.15-million-square-foot office building on the East Side of Manhattan. The 32-story building was originally developed in 1975 for Verizon as a telecom switching hub and has recently served as a back office facility. It was purchased in 2007 by Taconic, which later abandoned plans to redevelop the property. Verizon continues to occupy three floors.

Manhattan developer Young Woo & Associates will be a minority owner of 375 Pearl Street. Young Woo is an experienced player in both the  Manhattan real estate industry and the data center industry. Young Woo’s data center and telecom projects include a major financial data center in Carteret, N.J. and several New York communications hubs at 325 Hudson Street and 85 10th Avenue, where Telehouse has just opened a new colocation facility.

John Sabey said his company was excited to be part of lower Manhattan’s “ascendance as a world capital for data-based enterprises of all types.” He said Intergate.Manhattan would appeal to “new scientific, academic and medical research centers” in addition to data center tenants.

“The largest areas of growth for data centers are in the financial, internet-based service and networking, insurance, and healthcare sectors, particularly in life sciences research,” said Sabey. “Mission critical computing in these areas demands varying levels of availability and latency sensitivities. Indeed, the most infinitesimal delay in a single computer operation can be harmful. For these enterprises and for multi-national companies originating in Europe and looking to establish a North American data center location, New York is typically a prime choice.”

Interesting Times for New York Data Center Market

Sabey’s purchase of 375 Pearl Street comes at as time of flux for the Manhattan data center market. After buying 111 8th Avenue, Google has discontinued efforts to lease vacant space at the historic New York telco hub, apparently intending to dedicate the remainder of the building for use as Google office space.

There may also be changes afoot at New York’s other major carrier hotel, 60 Hudson Street. Grubb & Ellis reports that talks are underway to lease a four-floor, 240,000 square foot block of space at 60 Hudson. Meanwhile, two buildings have recently added new data center space. Data Center NYC Group has recently opened space at 121 Varick Street, while Telehouse has acquired data center space at 85 10th Avenue.

“As the few major existing data centers and carrier hotels in Manhattan are nearing capacity from space, power, and cooling perspectives, we view 375 Pearl as an asset uniquely positioned to offer a world class computing environment for those users with on-island data center needs,” said Chris Trapp, Sabey’s Vice President of Acquisitions & Leasing.  “The building has all the bones – an abundance of power, a purpose-built structure, and tremendous prospects from a connectivity standpoint to be just that.”

Sabey said it has hired Joseph Ryan as Managing Director Development for New York, heading the development of Intergate.Manhattan. Ryan boasts 28 years of experience at Tishman Construction during which he helped establish Tishman Technologies Corporation.

A better look at 375 Pearl Street in Manhattan, which will be redeveloped as Sabey.Intergate.

Sabey is reportedly working with Young Woo & Associates to purchase a huge former Verizon central office building in Manhattan. The Wall Street Journal says the companies have a tentative deal to purchase the building at  375 Pearl Street from M&T Bank  for about $100 million.

Sabey isn’t commenting about its plan. But the property is suitable for redevelopment as data center space, with sturdy floor loads that can support telecom and IT equipment. New York real estate watchers say the building will likely need significant investment.

While this would be Sabey’s first foray beyond its Seattle roots, it has a savvy partner in Young Woo, an experienced player in both  the  Manhattan real estate industry and the data center industry. Young Woo’s data center and telecom projects include a major financial data center in Carteret, N.J.  and several New York communications hubs at 325 Hudson Street and 85 10th Avenue, where Telehouse has just opened a new colocation facility

375 Pearl Street is a 1.15-million-square-foot office building on the East Side of Manhattan. The 32-story building was originally developed in 1975 for Verizon as a telecom switching hub and has recently served as a back office facility. It was purchased in 2007 by Taconic, which later abandoned plans to redevelop the property. Verizon continues to occupy three floors.

In January 2010 Sabey announced plans to  partner with National Real Estate Advisors (NREA) to form a new venture that will expand Sabey’s data center operations beyond its core market in the Pacific northwest. NREA is a real estate investment management and advisory firm owned by National Electrical Benefit Fund (NEBF), a multi-billion dollar pension plan that provides retirement benefits to employees in the electrical industry.

Sabey has more than 20 years of experience in the data center business and is perhaps the largest provider of hydro-powered facilities in the United States. The company controls more than 1.7 million square feet of data center space in Washington state that will form the nucleus of Sabey DataCenter Properties.

Its properties include the huge Intergate.East and Intergate.West developments in the Seattle suburb of Tukwila and the Intergate.Columbia project in Wenatchee, Wash. Sabey is also building a data center complex in Quincy, Wash. that will be called Intergate.Quincy.

Dell expects to start construction on its project in March, and plans to complete the facility in three phases, with the first phase coming online in 2012.  Phase two and phase three are estimated to be built by late 2018. “This construction date is estimated with respect to market demands and power availability,” the company said in a filing with the city of Quincy.

Dell Behind ‘Project Roosevelt’
Dell purchased 80 acres of land in Quincy last month in connection with a secretive data center project known as “Project Roosevelt.” County records indicate that Dell Marketing LP paid $3.6 million to purchase a property in the Port of Quincy.

The Sabey Intergate.Quincy campus will also be built in three phases, with a total built-out of 508,577 square feet of data center space, along with parking, infrastructure and landscaping improvements. Two buildings are 186,660 square feet each, while a third building measuring 140,000 square feet, according to filings with the city.

Yahoo, Microsoft Already Building
Both Yahoo and Microsoft have commenced construction on major expansions of their existing data center campuses in Quincy has become a magnet for data centers because of its abundant supply of cheap, “green” hydro power generated by area dams.

Last month Yahoo confirmed that it has begun building a second phase in Quincy that will feature its Yahoo Computing Coop data center design.  Just down the street from the Yahoo Computing Coop, Microsoft is building a next-generation facility based on its container-based IT PAC design.

Local officials hailed the Dell and Sabey projects as additional evidence of Quincy’s emerging status as a hub for data centers. Pat Boss, the Port of Quincy’s economic development and government affairs director, credited the restoration of  tax incentives by the state legislature earlier this year as a key step in helping the Sabey and Dell projects move forward.

“It’s making Quincy very competitive in recruiting these high-tech companies,” Boss said. “The fact is that Quincy and central Washington is back in the game again.”

In March the Washington legislature passed a targeted tax break would allow a 15-month sales tax exemption on the purchase and installation of computers and energy for new data centers in 32 rural counties. To qualify for the incentives, companies must commence construction by July 1, 20111 to qualify.

The city of Quincy has ruled that both the Dell and Sabey projects are not expected to have a significant adverse impact on the environment, and thus do not require an environmental impact statement (EIS). “This decision was made after review of a completed environmental checklist and other information on file with the lead agency,” the city found.

A view of the Intergate.Columbia data center complex built by Sabey Corp. in Wenatchee, Washington.

Sabey Data Centers (SDC) has signed a lease with a global financial firm for 36,000 square feet at its Intergate.Columbia campus in East Wenatchee, Washington, the company said this week. The tenant, which was not identified, will be consolidating its data facilities from around the world into the Intergate.Columbia campus. Sabey is currently preparing the site for the new tenant.

Sabey executives said the new lease was a enabled by a tax incentive package approved during the last legislative session. The legislation created a 15-month window in which data centers in rural Washington counties could benefit from a sales tax exemption for computer and electrical components. Several data center providers joined with the Washington Technology Industry Association and the town of Quincy to form the Washington needs Jobs coalition, which successfully lobbied to get the incentive package passed.

Sabey: Incentives = Jobs
“The sales tax exemption is working exactly as we had hoped,“ said John Sabey, President of Sabey Data Centers. “We are competitive in the global marketplace. The new projects are bringing jobs and economic activity. They are also expanding the tax base for local government.”

In the months following the passage of the tax incentives, Microsoft has begun building a second data center in Quincy, and Dell has purchased land in Quincy in connection with a data center project.

“The state has gotten a great return on its investment,” said Dave Johnson, Executive Secretary of the Washington State Building & Construction Trades Council. “The data center industry is critical for the economic future of Central Washington. It creates jobs and expands the local tax base.”

Data Center Cluster Develops
Central Washington has become a magnet for data centers because of its abundant supply of cheap, “green” hydro power generated by area dams. Microsoft pays just 1.9 cents per kilowatt hour for its power in Quincy, compared to rates of 8 cents an hour in Silicon Valley and even higher in the New York market. Yahoo, Ask.com and Intuit have also built or announced data center projects in central Washington.

Intergate.Columbia is a 430,000 square foot data center campus, which includes large data centers for T-Mobile and VMware. The new tenant is located in building B, which is a LEED Gold certified building shell. With the latest lease, Intergate.Columbia is 92 percent occupied.

Sabey said that multiple prospects are considering the remaining space at Intergate.Columbia. But he also expressed concern that the expiration of the temporary tax incentives could stymie future growth in the region. Companies must commence cosntruction by July 1, 20111 to qualify.

“The development we have seen in the last few months is just the very beginning,” Sabey said. “Central Washington has the potential to become a major data center hub, but that would require extension of the partial sales tax exemption. Extending the exemption will mean jobs and tremendous opportunity for the next generation. This temporary tax exemption should be made permanent for the health of the Central Washington economy.”

Background on the Tax Issue
NOTE: In some of our past coverage of the Washington state tax issue here at DFata Center Knowledge, we’ve stated that attorney general Rob McKenna ruled that data centers were “no longer covered by a state sales tax break for manufacturing enterprises.” The state Department of Revenue says the manufacturing tax incentive was not offered and rescinded; it simply never applied to data centers.

“I cannot explain why any company may have built a data center under the assumption that it qualified for this incentive, because the Department of Revenue has consistently denied any request for a tax exemption for data servers under the rural county deferral for manufacturers, and it has communicated its position to local economic development councils,” writes Mike Gowrylow, communications director for the Washington State Department of Revenue. “Data centers still don’t qualify under the manufacturing exemption, but the 2010 Legislature did open a separate window for data centers to qualify for a sales and use tax exemption.”

Gowrylow notes that Department of Revenue supported the 2010 bill to create the temporary tax incentive for data centers in rural counties.

A view of bey.comthe Intergate.Columbia data center complex built by Sabey Corp. in Wenatchee, Washington.

Sabey Corp. has obtained a Gold LEED certification for the shell and core for Building B of its Intergate.Columbia  complex in Wenatchee, Wash., while tenant VMware has received a Platinum LEED certification for the critical infrastructure for its data center in building B.

Platinum is the highest rating possible under the LEED ( Leadership in Energy and Environmental Design) program for energy efficient buildings overseen by the US Green Building Council, while Gold is the second-highest rating. The VMware data center is one of just seven LEED Platinum data centers.

Building B at Intergate.Columbia is a 188,000 square foot facility supported by 22 megawatts of utility power. Sabey Construction was the general contractor for both VMware’s tenant improvements and for the core and shell.

In its announcement today, Sabey noted that the LEED standard was designed primarily for office buildings, and that data centers with LEED certification often have a high ratio of office to data center floor. VMware’s premises are comprised of just 15 percent office space, with 85 percent dedicated to data center operations.

Construction of the shell, core and critical infrastructure for Building B, from grading to commissioning, was completed in approximately 9 months.   

Sabey’s data centers are located in the Pacific northwest and designed to take full advantage of the area’s natural climate to capture energy savings. “The climate enables evaporative economizer cooling for most of the year,” said John Ford, Director of Technology Real Estate for Sabey. “That alone accounts for 50 to 70 percent energy savings.”

Sabey also incorporates hot aisle encapsulation into its designs to isolate hot and cold air within the facility, as well as an overhead cooling design that drives improved use of space by removing the raised floor.

Seattle-based Sabey recently said that it will expand its data center operations beyond the Pacific northwest through a partnership with National Real Estate Advisors.

Rows of server racks inside the Sabey Corp. Intergate.Columbia data center complex in Wenatchee, Wash.

Sabey Corporation has partnered with National Real Estate Advisors to form a new venture that will expand Sabey’s data center operations beyond its core market in the Pacific northwest, the companies said Thursday.

The new company, Sabey DataCenter Properties, will include Sabey’s existing data center developments. NREA will have a minority equity interest and will invest $100 million, which will be used to support the current portfolio and finance growth in new markets.

Sabey is not identifying any of the markets where it may eventually operate data centers. But the company has forged a strong track record in building energy-efficient facilities, and its expansion comes at a time of growing interest in data centers built to the highest efficiency standards.

NREA is a real estate investment management and advisory firm owned by National Electrical Benefit Fund (NEBF), a multi-billion dollar pension plan that provides retirement benefits to employees in the electrical industry.

Sabey Corp. is a privately-held, Seattle-based commercial real estate development and construction services company that builds and operates data centers, medical facilities, office space and mixed-use properties. The company has built more than 27 million square feet of commercial, industrial and residential space and manages three million square feet of its own commercial and technology space.

Sabey has more than 20 years of experience in the data center business and is perhaps the largest provider of hydro-powered facilities in the United States. The company controls more than 1.7 million square feet of data center space in Washington state that will form the nucleus of Sabey DataCenter Properties.

Its properties include the huge Intergate.East and Intergate.West developments in the Seattle suburb of Tukwila and the Intergate.Columbia project in Wenatchee, Wash. Sabey is also building a data center complex in Quincy, Wash. that will be called Intergate.Quincy.

Doug Webster, Howard Loewenberg, and Justin Puccio of Signal Hill and Jim Kerrigan, Director of National Datacenter Group of Grubb and Ellis provided financial advisory services on the transaction. Scott Greenburg and Robert Starin, of K&L Gates LLP provided legal services.

A view of the Intergate.Columbia data center complex built by Sabey Corp. in Wenatchee, Washington.

Sabey Corp.’s Intergate.Columbia data center complex near East Wenatchee, Washington has received the Technology Development of the Year award from NAIOP, the commercial real estate development association. Sabey, a Seattle-based developer was presented the award at the Washington Chapter of NAIOP’s event on Nov. 6.

Intergate.Columbia is a 438,000 square foot data center campus, which includes large data centers for T-Mobile and VMware. Sabey Construction Inc. broke ground at the 30-acre site near the Columbia River in April 2008 and simultaneously constructed the shell and core for two buildings. Despite the dual schedules, the work was completed by the end of the year on time and within budget.

“The project would have been much more difficult had it not been for the support of the Douglas County officials who vigorously worked with us and assisted in our success,” said John Sabey, Senior V.P. Real Estate for Sabey.

The Douglas County Public Utility District gets 98.5 percent of its electricity from hydroelectric dams and 1.5 percent from wind generation. Other energy saving measures included the use of air economizers for “free-cooling” for most of the year, as well as evaporative cooling which is possible due to the relative dryness of eastern Washington’s air.

Sabey is in the final stage of LEED silver certification for Building B, where the tenant, VMware, is pursuing a platinum LEED certification for its Sabey-built tenant improvements. Building B’s mechanical system uses hot air/cold air physical separation as well as evaporative cooling. This enables a significant increase in data center efficiency by extending the number of hours that the data center can use air-side economizer “free cooling.” The cooling system also captures the server-generated heat to help maintain office temperatures year round.

Sabey also recognized John Ford, Director of Technology Real Estate; John Sasser, Manager of Data Center Operations; Doug Gardner, Senior Project Manager; Andrew Gardner, Superintendent; and Marcus McFarland, Project Engineer of Sabey Construction, Inc.