By Meghan Hall
Another data center company is expanding its presence in San Jose, following on the heels of an acquisition by Vantage Data Centers to acquire a property in San Jose. In two deals that closed in January and later in February, Stack Infrastructure purchased parcels adjacent to one of its most recent development sites.
The properties are bounded by Lundy Avenue, Fortune Drive, Ringwood Avenue and Trade Zone Boulevard. In January, Stack Infrastructure paid $15 million for 1849 Fortune Drive, a 3.7-acre property. In February, the firm spent $25 million on 2400 Ringwood, a 6.1-acre property.
The Mercury News was the first to report the transactions.
Stack Infrastructures’ most recent acquisitions are not far from one of its current projects at 2001 Fortune Drive. There, the firm is pursuing the redevelopment of the 9.26-acre property into a data center totaling 232,700 square feet according to documents on file with the City of San Jose. Previously, the property was developed with two industrial buildings, one of which will be demolished to make way for the project. The second building, already a data center, will remain as part of the larger development. Construction of the project is expected to take 18 months.
Data center operators and providers are continuing to pursue opportunities within the Bay Area—and especially Silicon Valley—to develop real estate. In recent weeks, Vantage Data Centers has purchased property to expand its local presence, spending $40 million on 2950 Walsh Ave., also in San Jose. The asset is developed with a building that totals 113,600 square feet. D.R. Stephens & Company’s website states that the building is currently occupied by MiaSole, an American solar company. The asset is developed with a building that totals 113,600 square feet. D.R. Stephens & Company’s website states that the building is currently occupied by MiaSole, an American solar company.
Looking ahead into 2021, total data center inventory is expected to grow by 13.8 percent, according to a November report released by brokerage firm CBRE. At the end of last year, there were 373.6 megawatts of development under construction across primary U.S. data center markets. Data center market growth has been largely driven by continued adoption of hybrid information technology, cloud services and artificial intelligence—all factors that support a diverse and widespread workforce.
Major data center markets—like Silicon Valley—will continue to benefit from their proximity to major urban centers and pre-existing network connectivity. According to CBRE, investor interest in the asset class has increased, and interested buyers continue to look for high-quality assets and strong credit ratings that will produce client retention in the long-run.