Digital Realty Trust has long been the leading player in the downtown Chicago data center market through its ownership of 350 East Cermak, the digital fortress that serves as the city's primary Internet hub. Digital Realty has now entered the suburban Chicago market, acquiring a 575,000 square foot redevelopment property in Franklin Park, Ill. for $22.3 million.
The new campus, to be called Digital Chicago, is located 10 miles southeast of O'Hare International Airport along Grand Avenue. The three-building, 22-acre data center campus will have the capacity to accommodate up to twenty 1.125 megawatt Turn-Key Flex data center PODs, or 32.6 megawatts of IT load. The first phase of construction, which includes six Turn-Key Flex PODs, is expected to be delivered and operational by mid-2013.
The seller occupies approximately two-thirds of the property and will continue as a tenant on a short-term lease. Digital Realty will have the option to terminate the lease if its needs to redevelop more space for new data center clients.
"By expanding into suburban Chicago, we can continue to accommodate the growing needs of our diverse customer base looking to locate their next facility in this important data center market," said Dave Caron, Senior Vice President, Portfolio Management, for Digital Realty. "This campus enables Digital Realty to offer customers a wide variety of solutions, from our move-in ready Turn-Key Flex and Powered Base Building data center solutions to a highly customized, build-to-suit data center facility."
Active Data Center Market in Chicago Suburbs
Primary electrical service for Digital Chicago will be provided by Commonwealth Edison Company. Digital Realty has the option of expanding the current capacity of the site to 45 MVA of total power.
"This acquisition provides stabilized cash flow in the short term, with a substantial, near-term redevelopment opportunity to expand the Digital Realty footprint in the suburban Chicago market," said Michael Foust, Chief Executive Officer of Digital Realty. "Similar to our other data center campuses in major markets such as Dallas, Santa Clara and Northern Virginia, this property is designed to accommodate corporate customers seeking fully-dedicated, enterprise quality data center space."
"Based on our conservative underwriting, which assumes redevelopment of all three existing buildings, we expect to generate attractive risk adjusted returns on this investment," said Scott Peterson, Chief Acquisitions Officer of Digital Realty. "With the redevelopment opportunity of the existing buildings, we believe this investment has considerable upside potential."