SANTA CLARA, CA-The Red Sea Group this month picked up its third Silicon Valley data center in the past 18 months as it looks to capitalize on a ramp-up in demand for the product type, which was overbuilt for a time but is now rebounding. In the latest deal, the international real estate development firm paid just under $6.2 million for a 21,000-sf center fully leased to Electric Lightwave.The building is located at 3075 Raymond. The tenant, a Vancouver, WA-based telecom firm, is in the process of being sold by publicly held Citizen Communications to privately held Integra Telecom of Portland, OR. Red Sea Group EVP Mitch Kralis tells GlobeSt.com that Electric Lightwave signed a 10-year lease in the first quarter of 1999, which means it has 3.5 years remaining on its lease term.

“We like the deal because of the contraction that has happened in the whole data center telco marketplace in the US, let alone in the West, let alone California,” he tells GloebSt.com. “A lot of the space was built three, four, five years early and now it’s all being gobbled up, especially in the Silicon Valley.”

The family-owned Red Sea Group originated in Tel Aviv, Israel, and came to the US commercial real estate market in 1992. In 2004, Red Sea Group USA, led by its president Avner Papouchado, CFO Max Brandt and EVP Mitch Kralis shifted the US headquarters from Dallas to the Los Angeles area. The company’s portfolio includes $1 billion of hotel, office, industrial, retail and residential properties in Eastern and Western Europe, South Africa, Asia and North America.

Kralis didn’t say how much he plans to invest in data centers, but says he’s looking at opportunities nationwide and expects to close on two additional centers in the next few months.

“What we are intending to do is grab up as many of these as we can and move forward and own them and do what we typically do very well, which is creating value,” he says. “We’re not out there saying we need to buy 20 data centers, only that the climate is good for us currently on something we have a good knowledge about.”

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