CLIFTON – The data-center real estate market in New Jersey has been pacing behind past years, but it appears to be picking up some steam in the fourth quarter, an executive from Cushman & Wakefield said Thursday.
A $200 million, 215,000-square-foot data center is under construction on Peekay Drive in Clifton for Telx, a New York City-based data-service company. It is set to open in April.
“There are about 1.1 million square feet of deals that should close in the next 90 days,” Sean Brady, senior director of Cushman & Wakefield and co-founder of its Data Center Advisory Group, told about 150 people during a “coming-out party” for a large new facility being built in Clifton by Telx.
In fact, Brady just concluded a deal, announced Thursday, for Atlanta-based Internap Network Services Corp. to build a 100,000-square-foot data center at 1 North Enterprise Drive, Secaucus. The first phase of that center is expected to open in the fourth quarter next year.
Brady was part of a panel, most of them from New York City-based Telx and its construction partner, Highland Associates Corp., at the Thursday’s event to discuss the information technology facilities.
Telx, which provides interconnection, data center services and cloud-enablement services, already has an 85,000-square-foot data center at 100 Delawanna Ave. in Clifton. It is building a 215,000-square-foot data center at 2 Peekay Drive, where the event was held. That $200 million flagship, near the Delawanna data center, will be ready for occupancy next April, Telx officials said.
Brady told attendees that the Garden State is the largest data center market in the country, in terms of square footage. Leasing activity has ranged from 1.2 million square feet to 1.6 million during the past four years, he said. But the market has been stifled by the lagging economy, and Brady said this year New Jersey won’t hit those past benchmarks. Including his Internap deal, to date there will have been about 500,000 square feet of data-center activity, he said. But appears to him that companies are now opening their wallets and looking to do such deals.
“In the past couple of weeks, by phone has absolutely been ringing,” Brady said, also predicting that “all segments of the data-center markets will improve in 2013 and beyond.”
Telx Chief Executive Officer Eric Shepcaro said that his company is “extremely bullish” about New Jersey overall as a site for data centers, and Clifton in particular.
He sees Telix in a strong position to take advantage of the trend toward outsourcing and the growth of bandwidth requirements in and out of data centers. “I’m very excited about this opportunity,” he said. “We’ve been seeking out tenants for the last couple of months. I think very shortly we’ll have our first couple of customers signed.”
Sumner Putnam, a vice president in the data center practice of Jones Lang LaSalle, said that the data-center market has been slower this year than in the past, but like Brady, he sees an uptick.
“We’re seeing a lot of pent-up demand,” Putman said. “The financial service community is the cornerstone of the tenant base in this market … That segment has been constricted over the past few years with regards to budgets. But the IT requirements coming out of these banks and financial institutions are only growing, as opposed to contracting.”
Data centers require a heavy concentration of utility power and immediate access to fiber networks, and “the Clifton region works for both of those,” Putnam said.
The data-center business also is benefiting because banks and financial institutions don’t want the responsibility of running such centers themselves, and would rather outsource the work, said Tom Traugott, a senior vice president for the Data Center Solutions Group at Cassidy Turley.
“Folks build less and less of their own data centers,” Traugott said.