Server Farm Realty Building on Three Fronts

The Red Sea Group, an investment group based in Israel, is expanding its ambitions in the U.S. market with Server Farm Realty, a subsidiary formed last year to pursue data center projects.

Rich Miller

March 23, 2011

3 Min Read
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The exterior of the Server Farm Realty data center in Santa Clara, Calif.

In international markets, the Red Sea Group is known primarily as a developer of upscale hotels and residential developments. In the U.S. , the company has focused on an entirely different type of tenant: racks and racks of servers. Red Sea, an investment group based in Israel, is expanding its ambitions in the U.S. market with Server Farm Realty, a subsidiary formed last year to pursue data center projects.

The company is developing new facilities in three markets, and also owns several data centers that are fully leased to a large telecom company. CEO Avner Papouchado has been buying and selling data centers since 1999, taking a few years off after the dot-com bust.

Papouchado said Server Farm Realty's approach focuses on customizing the right design for each project. "We design each building for where it is and what the market needs," he said.

Different Approaches in Three Markets

That has led to slightly different approaches in each of the three markets where Server Farm Realty is building speculative wholesale data center space. Its first project to hit the market will be a 27,000 square foot building in Santa Clara, Calif., supported by 3 megawatts of critical power, which will begin accepting customers in April.

In May the company will complete the first 10,000 square feet of space in the Titan Building in Moses Lake, Washington. It's a unique property that once housed an Air Force Command and Control facility. "It was built to withstand a 10 megaton bomb within a quarter-mile," said Papouchado.

Late last year Red Sea Group purchased the former Northern Trust building at 840 South Canal street in Chicago, and plans to spend $200 million to convert it into a data center. At more than 400,000 square feet, the Chicago property is substantially larger than Server Farm Realty's other projects.

Santa Clara Project

First up is Santa Clara, where the company will offer 13,000 square feet of finished technical space. "While Silicon Valley is home for most of the data centers in the world, there remains a high level of unmet demand," said Papouchado. "By offering LEED Silver certification and top-of-the-line energy efficiency, our data center delivers a level of reliability, sustainability and cost-savings that hasn’t been readily available."

In Santa Clara, Server Farm Realty is using a fire suppression system known as Hi-Fog, a fine water misting system designed to prevent extensive damage in the case of a fire. Robert Glavan, vice president of data center operations, said the system is new to the United States.

"It uses 90 percent less water, penetrates to the seat of the fire faster, causes the fire to burn at lower temperatures and eliminates cross-lineup water contamination," said Glavan. "The result is another layer of protection to our client’s data."

Papouchado refers to the site at 5101 Lafayette Street as a "bite-sized" building. The project is coming online at a time when multiple data center developers have active construction projects in Santa Clara. Digital Realty Trust, DuPont Fabros, Terremark, QTS and Vantage Data Centers have all had data center space under development.

But Papouchado isn't concerned about supply. "I definitely think there's enough demand in the market," he said. "I think people are building carefully."

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