Data Centers: $350M Bolstering CoreSite Data Center Portfolio

Data Centers: $350M Bolstering CoreSite Data Center Portfolio

SANTA CLARA, CA-CoreSite, a Denver-based data center operator with 10 properties under its belt is increasing its foothold in the Silicon Valley with a $350-million investment that will eventually add 230,000 square feet of data center space in three buildings. The first building, a 50,000-square-foot facility with eight megawatts of electrical capacity is scheduled for delivery in the first quarter of 2010.

CoreSite currently operates two Bay Area data centers, as well as eight other facilities across the United States. The new three-building campus at 2901 Coronado Dr. is designed to gain LEED Gold certification. In addition to energy efficient design, CoreSite Santa Clara will offer security features such as mantraps, CCTV surveillance and biometric scanners.

CoreSite executives were unavailable Thursday do discuss the specific location of the property and whether any of the space has been pre-leased. The company builds and manages data centers and currently provides two million square feet of wholesale data center space and collocation services to 500 customers.

By expanding in Santa Clara, CoreSite is playing on the home field of Digital Realty Trust, a publicly traded data Center REIT headquartered in San Francisco. Digital Realty has been expanding in the Bay Area as well, but mostly by acquisition, and is a much larger player with 13.8 million square feet in 77 properties in 27 markets throughout Europe and North America.

In November, Digital Realty paid $90.5 million in cash and assumed debt for the fully-leased 185,000-square-foot Bayshore Data Center, which is located adjacent to Silicon Valley Power and US Highway 101 in the Santa Clara data center cluster. The seller, Inland Western Retail Real Estate Trust, paid $95.7 million for the three-building complex in 2005. The tenants are Sprint Communications, Equinix and Layer42.Net.

“Demand for data centers such as Bayshore continues to outpace supply by a margin of two to one,” one of the listing brokers, Gerry Rohm of HFF’s San Francisco office told at the time of the Bayshore acquisition, helping explain why CoreSite is moving forward with ground-up development here despite the overall economic conditions, and why Digital Realty is buying up existing properties. “There is limited new supply in the data center cluster coming online in the next three years due to a lack of construction financing, which will continue to drive up rents for data center services.”

In September, Digital Realty acquired 444 Toyama Dr., a 42,000-square-foot [net rentable] data center in Sunnyvale that is net leased through 2022 by a single tenant. A that time the company also announced the purchase of the interest it did not already own in 1525 Comstock, a 42,000-square-foot LEED Platinum data center in Santa Clara that is also fully leased. In August, the company acquired a 60% interest in Collins Technology Park, a seven-building, 787,000-square-foot development in Richardson, TX, that it plans to convert to a data center. Its JV partner is Dallas-based Skyrise Properties.

By Brian K. Miller for GlobeSt


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