Equinix Executes Long-Term, 45,319 SQFT Lease Extension in Palo Alto as Local Data Center Market Surges

Equinix, Menlo Equities, Palo Alto, JLL, Switch and Data Facilities Company
Courtesy of Menlo Equities

By Meghan Hall

Equinix, a multinational digital infrastructure company, has solidified its commitment to Palo Alto for the next two decades. According to sources familiar with the transaction, Equinix has agreed to occupy 45,319 square feet at 529 Bryant for the next 20 years. The agreement was finalized as the local data center market continues to grow and solidify its place as one of the  most competitive  in the country. 

The value of the lease comes to about $106 million. Sources did not name the parties involved, but property records show the asset is owned by Palo Alto-based Menlo Equities. SEC filings indicate that Equinix has been a tenant at the property for the past decade. JLL represented both parties in the transaction. JLL has declined to comment for the story.

The lease is expected to commence in the second quarter of 2021. Equinix originally came into the building in 2010 after acquiring Switch and Data Facilities Company for $638.4 million.

Menlo Equities formed 529 Bryant Partners LLC to acquire the asset in 2000. The building features a break room, loaner tools, work kiosks, crash carts and conference rooms, among other amenities.

“It is a ‘100 percent’ location, due to its proximity to the heart of Palo Alto,” states Menlo Equities of the property on its website. “The property is one of the most interconnected data centers on the West Coast with dozens of fiber providers and nearly 100 major network connections.”

A recent report released by JLL found that data centers held their own over the past year,, indicating that the sector was one of the most resilient in light of the pandemic. JLL describes demand for data space as “insatiable,” as absorption reached 619.3 megawatts during 2020. By the end of the year, Northern California absorbed 35.3 megawatts, one biggest in the country.

Amongst all this demand, data centers like the one Equinix occupies produced some of the hightest returns when it came to product type. Data center REITs yielded 17.2 percent in returns, while the infrastructure sector and industrial sector yielded 10.2 percent and 9.8 percent in returns, respectively. Cloud demand, enterprise colocation demand and operator investment remain robust, 5G demand is also expected to increase activity in the market. Combined, these factors provide a strong backdrop for data center growth in 2021.

West Coast Commercial Real Estate News