Russo did its first data center development in 2001--a 300,000-square-foot spec building in Carlstadt that was leased to Sungard, another third-party data center management provider. "This is our sixth data center deal in northern New Jersey over the past eight years," Pembroke says. "We've developed a niche for this type of development. It's become a good opportunity for us because we've spent a lot of time searching for sites and locations that can be suitable for data facilities."

Among the elements that are critical for a data center project are the power, water and telecommunications infrastructures in the area as well as environmental factors, such as whether the site is prone to flooding or other natural disasters.

Northern New Jersey is particularly suitable for financial companies' backup data centers due to its proximity to Manhattan. "The rule of thumb is a 50-mile radius from Midtown Manhattan is usually a good location for these types of facilities," Pembroke says. And even in down times, data centers have proved to a resilient sector in the Garden State Office market.

However, Pembroke does concede the current economic slump has made companies reluctant to pursue a costly data center deal at this time. "We've seen a good amount of requirements out there put on hold indefinitely until the financial crisis is resolved," Pembroke says.

Further, firms are looking for occupancy ready properties, Pembroke adds. "Before, we would build a shell and core with utility infrastructure," he says. "Now, we are getting some requests to actually provide a full turnkey solution where we would build out the entire data center and lease it to them at one rate as a package. Because of the constraints these companies have about issuing a large capital expenditure at this time, we are seeing a lot more requests for full turnkey solutions that we haven't seen in the past and from extremely large companies as well."

Yet Pembroke says Russo will continue to be active in the sector. It currently has one site under control and is targeting several others. "The financial crisis is reaching the data center sector," he says. "But we believe the long-term prospects for this market are positive because a lot of the trends point to increased activity in the coming months and years."