BYTEGRID Acquires Facility In Chicago Suburb

BYTEGRID continues its strategy of acquiring into underserved markets next to major, capacity constrained markets. The company has acquired a 75,000 square foot facility from CNA. It's leasing a third of the facility back to CNA and converting the rest into multi-tenant data center space.

Jason Verge

January 20, 2014

3 Min Read
BYTEGRID Acquires Facility In Chicago Suburb



The new BYTEGRID data center in Aurora, IL. (Photo: BYTEGRID)

BYTEGRID continues its national expansion into underserved markets. The company has acquired a 70,000 square foot data center from insurance company CNA (Continental Casualty Company) under a sale and partial leaseback agreement. CNA will operate out of a portion of the building, while BYTEGRID will convert the remaining space into a multi-tenant data center. The company will begin leasing 25,000 square feet of space and 6 megawatts of power at the Tier III data center, which sits on 5.25 acres of land

“Chicago is one of the best markets in the country,” said Ken Parent, CEO of BYTEGRID. “It’s a top six market, and of those, probably one of the most supply constrained. The suburbs are very strong. Aurora is a great location, with great proximity to Chicago. This fits into our strategy because we like to go places that are underserved, and Aurora has no multi-tenant data center product out there despite being the second-largest city without data centers."

The acquisition fits BYTEGRID's template of buying corporate data centers in underserved markets through a sale-leaseback with a tenant in place, then developing the remaining of the building for multi-tenant wholesale data center space.  It's a model that provides a reduced risk profile, but more revenue upside than simply buying a single-tenant facility.

“Our blueprint for converting single tenant data centers to multi-tenant data centers is proven as a complimentary strategy for large organizations seeking to optimize IT performance and operating costs in a way that is completely transparent," said Parent.

Aurora has a lot of parallels to Silver Spring, Maryland, a market where the company acquired its first data center in 2011. Aurora and Silver Spring are both located near massive data center markets (Chicago and Ashburn, respectively) and can take full advantage of rich connectivity, but without the competition next door.  Another advantage of Aurora is the cheap cost of power, at around 5 cents per Kilowatt-hour.

“We’re a little bit unique in the space in that we don’t need to put data centers next to data centers,” said Parent. “We evaluate our risks. Silver Spring has a lot of inventory that’s doing extremely well.  We are also expanding to develop the inventory in Cleveland and Atlanta.”

Cleveland is another underserved market the company recently entered following the securing of a $100 million credit facility. The company has the money to make this a big year for expansion and acquisition.

Facility History

CNA built the facility in 2007 for business continuity and to increase capacity and scale over time. The facility features 34,000 square feet of existing raised floor. CNA will continue to occupy approximately 30 percent of the facility and remains the primary tenant under a newly created long-term lease agreement.

The facility is connected with multiple tier one telecommunication and fiber carriers, and BYTEGRID says many are expressing interest in establishing a presence in the facility based on proximity to Chicago and BYTEGRID’s customer profile.

“CNA’s success and leadership position has been built upon a long-term commitment to customer satisfaction combined with strong financial acumen,” said Thomas Pontarelli, CNA’s Executive Vice President and Chief Administration Officer. “Our partnership with BYTEGRID allows us to lower our future IT operating costs and to leverage alternative facilities while taking advantage of BYTEGRID’s proven data center operations experience and all the benefits a multi-tenant data center has to offer.”

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