By Meghan Hall
Amazon’s data and cloud services division has purchased 66 acres of land along Gilroy’s main drag, expanding its Northern California holdings even further. In a transaction that just recently closed, the e-commerce giant paid $31.3 million for the property. The sellers were local developers Eli Reinhard and John Filice.
According to the Mercury News, who first reported the transaction, the land is valued at around $7 million. However, its position directly next to the Gilroy Premium Outlets at the center of town makes the property well-poised for redevelopment. The property is also just off of Highway 101.
Amazon Web Services (AWS) is already present in the Bay Area; currently, the division has a 15-year lease at 2305 Mission College Boulevard in Santa Clara. The two-story office and research and development building totals 358,000 square feet, but is entitled to become a 500,000 square foot data center in the future. he data center would be home to computer servers for private clients and would be designed to provide 60 megawatts (MW) of information technology power, states project documents. A mezzanine would be located on each floor on the eastern and western sides of the buildings, and additional employee amenities would be located in a wing to the west. Just prior to Christmas last year, the 15-acre property was sold by Madison, N.J.-based Prudential Real Estate for $101.38 million.
The San Francisco Bay Area has quickly become a hub for growing data center companies and investors in data center-related real estate. In May, San Francisco-based ICONIQ Capital and Iron Point Partners, announced that its new data center fund, IPI Partners II, is seeking to raise $1.5 billion to invest in data center markets across the United States, including Silicon Valley. In February of this year, Google announced it was investing $10 billion into data centers, while in the same month Facebook leased 335,000 square feet in Santa Clara. The lease is part of a property owned by Vantage Data Centers. Most recently, CoreSite completed its 162,000 square foot, 18 MW SV8 Data Center, while data center builder EdgeConneX purchased a collection of Santa Clara buildings for $83.25 million.
In 2019, wholesale data center inventory increased by 468.7 MW throughout primary markets in the U.S., according to a report released by CBRE. Even as Silicon Valley continues to add inventory, it has become the tightest market in the country, with 290 MW of capacity and a vacancy rate of just six percent. As a main connectivity hub for the Western United States, and due to its proximity to major tech firms, Silicon Valley and Northern California are both target markets data center investors and will likely remain strong in the future.