Flurry of Leasing Activity in New Jersey Market

There's been a flurry of leasing activity in the New Jersey data center market since the Wall Street Journal expressed concerns about a "glut" of server farms in the state.

Rich Miller

July 26, 2011

2 Min Read
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If New Jersey is any indication, perhaps the best thing the Wall Street Journal could do for the data center industry is to keep writing that there's too much data center space. In early June the Journal wrote that New Jersey was facing a "glut" of server farms.

Since then there has been a flurry of leasing announcements in the state:

  • On July 7, Sentinel Data Centers announced that it has leased more than 50,000 square feet of wholesale data center space in its Somerset, NJ data center to three of the largest Fortune 500 firms. As a result, Sentinel said it will immediately begin construction on the second phase of construction at the data center.

  • On July 21, i/o reported that "one of the largest global financial services companies" has gone live with a 3.6 megawatt data center installation at the new i/o New Jersey facility in Edison, N.J. The customer equipment was installed and brought into production in 90 days using the i/o Anywhere modular data center, the company said.

  • This week Grubb & Ellis reported that Digital Realty Trust is now 100 percent leased at its 3 Corporate Place data center in Piscataway, having leased "a few thousand square feet" of remaining space. G&E reports that Digital Realty (DLR) has lined up tenants for about 20,000 square feet of turnkey data center space in its building in Franklin Township. The company has not yet leased an existing 11,000 square foot wholesale pod available at another Piscataway facility.

"It seems that the New Jersey wholesale data center market is improving," writes Michael Mandel on the Data Center Practice blog. "The good news from Sentinel and encouraging news from DLR is the most we’ve heard in quite some time, but until we hear more positive news from DuPont Fabros, it will be hard to make a proclamation that the market is heating up again."

The DuPont Fabros Technology (DFT) data center in Piscataway represents the largest single chunk of space. with 18 megawatts of power capacity (of which about 4 megawatts is leased). DuPont Fabros typically announces new leasing activity when it reports its earnings, which are scheduled for August 2 after the close of the financial markets. If DFT reports leasing activity at NJ1, it would go a long way toward addressing the concerns about oversupply. If not, it will raise tough questions about why other wholesale and modular players are leasing space while DuPont Fabros is not.

For more background, see our analysis of the New Jersey data center market.

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