Equinix Building Boom Continues. Is Chicago Next?

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A look at the full cable trays in an Equinix data center. The company had a "milestone year" in 2012, according to CEO Steve Smith. (Photo: Equinix)

For Equinix, 2012 was a year of extraordinary expansion in its global infrastructure, as the company spent $607 million on data center construction and another $334 million to acquire companies in key international markets. That colocation company's growth spanned four continents, adding capacity for for more than 15,750 cabinets, with expansions in northern Virginia, northern New Jersey, Dallas, Miami, London, Paris, Amsterdam, Frankfurt, Hong Kong, Shanghai, Sydney and Singapore.

"2012 was a milestone year for Equinix," said CEO Steve Smith. "We delivered half a billion dollars of revenue in the fourth quarter, underscoring the scale and reach of our business. With our entry into Mainland China, Jakarta and Dubai as well as our continued investment in existing markets, we now have over 7 million of gross square feet of capacity, making us the largest retail colocation provider in the world."

The building boom will continue in 2013, as Equinix expects to spend another $550 million to $650 million in capital expenses for this year, including up to $485 million on data center construction and expansion. That could include new space in downtown Chicago, where Equinix is being tied to a project that has been seeking a major data center tenant.

New Site in Chicago?

Chicago Real Estate Daily reported this week that Equinix may invest in a new facility at 111 Cermak Road, a project that local developer James McHugh has been positioning for data center use. The paper said Equinix and McHugh are in "advanced talks" on the project. Equinix declined comment on the report, noting that its only announced expansion in Chicago is a new phase at its CH3 data center in Elk Grove Village in the suburban Chicago market, where it plans to add capacity for 630 cabinets in coming weeks.

Current plans for 111 Cermak call for a six-story, 315,000 square foot ground-up data center adjacent to the McCormick Place convention center and 350 East Cermak Road, the enormous carrier hotel operated by Digital Realty Trust, which is now fully leased. Equinix is one of the largest tenants at 350 East Cermak, where it operates two data centers and a vibrant financial trading ecosystem supporting Chicago's exchanges. With no more space available at that building, the McHugh property offers a potential off-site expansion option.

Building Phase I in Toronto

Equinix said yesterday that it will invest $42 million this year to complete the first phase of TR2, the company's new Toronto data center. The initial phase of the 220,000 square foot facility will feature 137,000 square feet of data halls, and will be supported by 8 megawatts of power, with the option to expand to 20 megawatts.

The expansion in Toronto is part of Equinix’ ongoing focus on providing colocation space and interconnection centers in leading financial markets. Toronto is home to the Toronto Stock Exchange, the largest financial exchange in Canada.

Equinix also has budgeted 2013 capital for facility expansions in Zurich, Frankfurt, Tokyo and Singapore. Those projects reflect a shift in where Equinix is investing in its data center footprint. In 2012, the company spent 53 percent of its CapEx on expansion in the Americas, compared to 47 percent between Europe and the Asia-Pacific. This year Equinix will target 56 percent of its capital in Asia and Europe (28 percent apiece) and just 44 percent in the Americas.