QTS Buys DuPont Fabros Tech’s New Jersey Data Center
Site gives QTS expansion capacity as its two other Jersey facilities are virtually full
![QTS Buys DuPont Fabros Tech’s New Jersey Data Center QTS Buys DuPont Fabros Tech’s New Jersey Data Center](https://eu-images.contentstack.com/v3/assets/blt8eb3cdfc1fce5194/blt8ebd9c5baf11483e/66210cdd25bbb4258c15bad5/NJ1-Solar-470.jpg?width=1280&auto=webp&quality=95&format=jpg&disable=upscale)
QTS Realty Trust has acquired a 38-acre data center campus in Piscataway, New Jersey, from DuPont Fabros Technology, which has been shopping the site around since early this year following a decision to exit the New Jersey market.
Washington, DC-based DFT entered New Jersey with the 360,000-square foot data center about six years ago under the company’s previous CEO, Hossein Fateh, who was one of the founders. Eventually, its management team, currently headed by CEO Chris Eldredge, found that the market was better suited for retail colocation services than for its wholesale data center leasing model.
While DFT has been knocking it out of the park in all other markets it’s in – Northern Virginia, Silicon Valley, Chicago, and more recently Toronto – New Jersey has been a sore spot, its only weak market.
Read more: Why DuPont Fabros is Exiting the New Jersey Data Center Market
QTS is a Better Fit for New Jersey
Chicago-based QTS has a different business model, offering a wide variety of data center services, from wholesale and retail colo to cloud and managed services, which means it is better aligned with market needs in New Jersey than DFT is.
QTS paid $125 million for what will become its third New Jersey data center, the company said in a statement issued Monday. The facility’s current power capacity is 18MW, but the new owner plans to add 8MW more over “the next few years.”
Its current customers include a major pharmaceutical company, a large media company, and multiple financial services firms, according to QTS. These customers occupy 56,000 square feet of data center space and require 8.4MW of power.
Read more: Data Center Market Spotlight: New Jersey
The utilization rate illustrates just how slow the take-up in the facility has been for DFT over the six years it’s been in the market.
The deal gives QTS much needed new capacity in New Jersey, the company said. Its 32,000-square foot Jersey City data center is 95 percent full, and the 58,000 square feet of data center space that’s been built out at its Princeton facility is at capacity.
Steep Discount
A core part of QTS’s business strategy has been buying large properties at steep discounts, and the DFT deal isn’t likely to have been different. When it announced its intent to sell the property, DFT said it expected to incur an “impairment charge” between $115 and $135 million as a result of the sale. That would be the approximate range of the size of the discount the potential buyer would receive.
The Piscataway facility’s purchase price “represents an upfront cost per megawatt of below $7 million, which is materially below average cost to build in the New York-New Jersey market,” QTS said.
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