Vantage Data Centers has signed a new long-term customer lease for a 1 megawatt data hall on its campus in Santa Clara, California, the company said this week. The deal continues the busy pace of leasing in Santa Clara, the hub of data center activity in Silicon Valley.
Vantage said construction is already underway on the new customer installation, with opening anticipated in the second quarter. The company also said it has completed commissioning of an additional 3 megawatts of critical power at its V1 facility, bringing the total power capacity at its Santa Clara campus to 23 megawatts.
Vantage’s first building, a 6 megawatt retrofitted facility known as V3, is fully leased to four tenants, including Mozilla Corp. Vantage then leased its entire V2 data center to a single tenant in a 9-megawatt lease. Telx is the anchor tenant in V1, where Vantage is now building out the remainder of the building in phases.
"Our growth continues in Santa Clara and we're excited to see that our custom solution model continues to be effective in a very competitive marketplace," said Vantage CEO Jim Trout. "As we continue to build new solutions to support our leasing back-log and lease new space, we remain convinced that the industry leading customers with whom we work continue to value corporate cultural alignment, demonstrated delivery capabilities and customization to support their business objectives."
Vantage says its 18-acre Santa Clara campus can support up to 47 megawatts of critical power demand, can can deploy up to 15 megawatts of space. That's a point of interest in Santa Clara, the data center capital of Silicon Valley, where the supply of data center space has been closely watched.
Santa Clara Market Dynamics
Just a year ago many believed the Santa Clara market for wholesale data center space had too much supply, with DuPont Fabros, Vantage, Digital Realty and CoreSite all bringing new space online. But active leasing in the second half of the year - including two large leases by DuPont Fabros that brought its huge facility to 75 percent occupancy - has changed the market dynamics.
Digital Realty, which has the largest data center footprint in Santa Clara, estimates that there were 23 megawatts of available wholesale data center space in Silicon Valley at the end of 2012. But the company's data shows that the Silicon Valley market absorbed 33 megawatts of space last year and 36.2 megawatts in 2011, which suggests that at current demand levels, the existing space could be filled as soon as the third quarter of 2013.
That view aligns with the assessment of DuPont Fabros. "We continue to see good demand and are optimistic about fully leasing the (SC1) property by mid-2013," said President and CEO Hossein Fateh.
But the ready inventory and competitive nature of the Santa Clara market has meant a slightly lower return. "When we delivered the property in the fourth quarter of 2011, our goal was an 18-month lease up and achieving a 12 percent unlevered return," said Fateh. "With the most recent leasing in the fourth quarter, we're now targeting a 10 percent unlevered return."