CHICAGO—The demand for online content will soon double the size of the nation's data center sector, experts say, but for now, available space remains scarce in some key markets, including Chicago. In fact, of the region's total inventory of about 3.9 million square feet, just 266,947 square feet of commissioned space remains vacant, according to JLL's latest data center report. But once the power limitations in several key submarkets are fixed, the company expects that major providers will accelerate the launching of speculative builds, and by late 2017, these new vacancies should give users more leverage to negotiate lower rates. “There are already a number of groups kicking tires in the market,” Sean Reynolds , managing director with JLL and co-leader its Midwest Chicago Data Center Services, tells GlobeSt.com. Many have established operations in other data center hubs such as Northern VA, Dallas and Southern CA, but really want to be in the Chicago market, largely due to its location near the nation's geographic center and its advanced fiber connectivity. “We're going to see the supply ramped up.” Developers currently have 255,000 square feet of new data center space under construction in and around Chicago, according to JLL, which will add 27 MW of capacity to the market's existing 502 MW. And another 503,000 square feet with 49 MW is in the planning stages. So far this year, users have absorbed 32 MW. But the demand from cloud users such as Facebook , Google is so intense that it will take some time for the new supply to catch up, Reynolds says. And providers will need to have capacity ready to go on short notice, and that means much of the new development will be on a speculative basis. DuPont Fabros Technology , one of the major data center REITs, operates two wholesale data centers in suburban Elk Grove Village, and Reynolds says each has a high occupancy rate. Just this year the provider signed SalesForce and Apple for a total of 8.8 MW at its CH2 facility. Furthermore, it has purchased an industrial complex just to the west and plans to soon begin a third phase that will add about 18 MW in the next 12 months. The major obstacle to new development in the region is that several critical substations around O'Hare Airport, including Elk Grove Village and Franklin Park, have reached capacity. Providers still have the option of building near Chicago's downtown, or around Aurora where land is cheaper and “there is less demand on the substations,” Reynolds says. Still, he adds that ComEd already has plans in place to boost the capacity of the substations around O'Hare, and can launch the project once a provider begins building a major new data center. “They know they have a lot of customer demand in this market.”

Instant Insights /

Data Center Space in Chi. has Become Scarce

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