Digital Realty Expands into Chicago Suburbs with 575 KSF Campus

Digital Realty Trust, living up to its promise to create demand in the Midwest market, has acquired a 575,000-square-foot redevelopment project in a Chicago suburb to transform the property into a data center.

During Digital Realty Trust Inc.’s first quarter earnings conference call in late April, company CEO Michael Foust revealed that the REIT saw an opportunity to “create more product for the customer demand that we’re seeing in the Chicago market.” Recently the REIT took a big step in that direction. Shelling out $22.3 million, Digital Realty Trust acquired a 575,000-square-foot redevelopment project in Franklin Park, Ill., with plans of transforming the three-building property into Digital Chicago, a premier data center.

Digital Realty is no stranger to the Chicago market, although, the development of Digital Chicago will mark the REIT’s debut in the local suburbs. The move comes as little surprise to experts in the data center world. “Players like Digital Realty Trust maintain a pretty good foothold in the Chicago market and are looking to expand their presence, and [Digital Realty’s desire to expand] has been pretty much common knowledge for the past three years, Hansel Bradley, a business development executive with leading national builder M. A. Mortenson Co., told Commercial Property Executive.

Consisting of three buildings along Grand Ave., approximately 10 miles from O’Hare International Airport, the newly purchased 22-acre site is roughly two-thirds occupied by the seller, The Frain Group. The pre-owned packaging and processing machinery provider is maintaining its home at the property under a short-term lease agreement; however, the contract allows for early termination should market demand spur the need for additional redevelopment sooner rather than later.

Digital Realty has wasted precious little time moving forward with construction of the first phase of Digital Chicago, which is on track to come online by mid-2013. The facility will offer six of the REIT’s signature Turn-Key Flex PODs. Ultimately, the property will have the ability to accommodate as many as 20 of the 1.125 megawatt-PODs.

There is an increasing need for data center space in metropolitan Chicago, driven by both the entrance of new businesses into the area and the expansion of existing users. “Some of the key drivers that are actually making this happen include a number of internal requirements from existing users that are doing well and looking to expand, as well as external factors,” Bradley said. “The Midwest at large is fairly geo-stable and relatively [at a distance] from natural disasters and manmade disasters so a number of companies are looking inward from the Coast, both East and West. They are looking for that kind of stability and that’s pretty evident by the number of your big major internet content providers and software developers that are looking into the Midwest and have implemented builds in the Midwest, and Chicago is no exception.