Stream Data Centers Focusing on Wholesale

Stream-Richardson-II

The new Stream Data Centers private data center property in Richardson, Texas.

In its 12 years in the data center business, Stream Data Centers has leased or sold data centers to blue chip companies like Apple, Home Depot, AT&T, Sprint and Nokia. It has followed the opportunities the market has presented, and recent shifts in demand have led the company to focus on the wholesale data center market.

Stream Data Centers is part of Dallas-based Stream Realty, and has targeted the Dallas market for several of its developments of wholesale space - which it calls "private data centers." The company broke ground on its first project in Richardson, Texas in March 2010. The 20,000 square foot facility, which included 10,000 square feet of data center space, was fully leased shortly after it was completed, and was sold in June to Carter Validus Mission Critical REIT for $28.9 million.

New Project in Richardson

Stream recently broke ground on its Richardson II private data center project, a 72,500 square foot facility that will house  three 10,000 square foot pods, each with 1.125 megawatts of critical power capacity.

"We've always been about delivering data center space to top quality companies," said Paul Moser, co-Managing Director of Stream Data Centers. "In our first 5 to 6 years, we bought property and leased it to companies."

But soon the market changed, and Stream adapted its strategy. "In about 2006, when we saw no properties available to buy, we developed our first ready to fit data center," Moser said. In the new model, Stream provided a "powered shell" in which customers could build out their data center environment.

Economic Crisis Prompts Shift 

One of Stream's projects was a ready-to-fit (RTF) data center in San Antonio, which was built in late 2008 around the time of the U.S. financial crisis. The company recently sold the facility to a Fortune 100 customer. But the process of leasing the site revealed a shift in customer interest.

"When we were marketing our San Antonio site, nearly every company we spoke with asked about wholesale space," said Anthony Bolner, Senior Vice President of Stream Data Centers. "It's the financial crisis  - that's when we begin to see the demand for operational data center space. It's really the market telling us what it needed, so now we're focused on the private data center."

Bolner said the dynamics of the market for powered shell space has changed in recent years, as more states have begun competing for data center projects. "We've seen a huge shift in the last three years," he said. "Incentives are playing an enormous role, with property and income tax abatements in play."

Stream says the Dallas market continues to see strength in a number of industries. "We have a good, diverse economy in Dallas," said Moser. "We have seen good strong demand from Dallas-based companies, but we also see Dallas as one of the top five or six markets nationally."