DuPont Fabros Buys Land for Expansion in Chicago

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The DuPont Fabros CH1 data center in Elk Grove Village, Ill. The company has bought adjacent land for a second Chicago-area data center. (Photo: DuPont Fabros)

Data center developer DuPont Fabros Technology has bought 15 acres of land in Elk Grove Village, Illinois to serve as the home for its second data center in the Chicago market. The company says it has nearly filled its existing CH1 facility, and is ready to add more capacity to support customer growth.

DuPont Fabros (DFT) paid $14.2 million to Prologis to acquire the land, which is adjacent to the CH1 facility. The company says it expects to commence development in the second quarter of 2014 and complete the building in the summer of 2015.

"We are working on the design of CH2," said CEO Hossein Fateh in a recent earnings call. "Due to the parcel shape, size and the largest single load the utility can deliver, we expect this building to  total approximately 26 megawatts of critical load."

Fateh said that the new facility will feature a new data center design the company has developed. Although the location requires some minor adjustments to DFT's design, it "provides an optimal growth plan."

"Experience shows us that tenants like to take additional space within our campus as their requirements grow," he said. "We have typically benefited from this embedded organic growth, and we are poised to capture similar growth in CH2."

DuPont Fabros operates more than 2.5 million square feet of data center space across four cities, providing 218 megawatts of electricity to power their tenants’ Internet and IT operations. Its Chicago tenants include cloud hosting provider Rackspace Hosting and colocation provider ServerCentral. Having expansion space nearby is attractive to fast-growing companies, which is why Fateh said DuPont Fabros was willing to pay a premium for the property. The price of land typically amounts to about 3 percent of the total cost of a data center.

"The location for a data center is strategic," said Fateh. "Being directly across the street, you could throw a tennis ball from this side of the street to the other and hit it. That's where we really want to be. Did we maybe a little bit pay a premium to get it from ProLogis? Yes, probably. The campus environment of the data center where we have consistent organic growth from one data center to the other is where the leasing becomes easier. It's definitely worthwhile to pay a little bit more and get the location you need."