This old printing plant at 350 E. Cermak Rd. in Chicago now plays a key role for the Internet, and will soon have a companion building.

CHICAGO—Digital Realty is set to launch a new data center adjacent to its mammoth Lakeside Technology Center, a 1.1 million square foot data center at 350 E. Cermak Rd. This location will make the new project a key component in the nation's tech infrastructure, but before breaking ground, the company wants to test the waters.

“It's ready to start construction today,” Todd Bateman, North American agency practice leader for CBRE Group Inc.'s data center solutions group, tells GlobeSt.com. CBRE has started pre-leasing for the center, which will provide up to 660,000 square feet and 54 megawatts of utility load. “But technology moves rapidly; major users especially can quickly evolve, and before we build a building of this size and importance, we want to make sure it is harmonized with their needs.”

Discussions with potential users could impact many elements, including the amount of power per square foot available in the building, or the level of resilience provided to tenants, Bateman says.

He adds that these factors can greatly change the amount of capital needed for the new center. If, for example, prospective tenants want a facility with greater resilience, Digital Realty will spend more on the backup generators and cooling components that help provide a “cocoon of safety.”   

Although CBRE and Digital Realty do not have a strict timeline for this preliminary work, Bateman says it will last at least a couple of months. “Finding out exactly what the market needs and wants is the exercise here.”

However, he is very confident that tenants will be eager to grab space in the planned 12-story annex to the Lakeside Technology Center. “This building will provide a zero-latency connection, no delay, to 350 E. Cermak, which is one of the most important buildings to the Internet. That makes this one of the most compelling development sites in North America, and for that matter, the world.”   

Digital Realty's flagship center is most popular with financial services firms, content providers and telecommunications firms. And Bateman expects that, at least initially, these groups will form the lion's share of those that express interest in the new development.

There seems little doubt that the Chicago region has enough demand to justify the creation of new data centers. 350 E. Cermak has essentially been 100% leased for at least a decade, Bateman points out, and the regional vacancy rate currently hovers around 4%.

And the market conditions in Chicago mirrors what's happening across the nation. “In most markets, we see no deficit in supply compared with demand,” he says. In fact, “we have not seen a business cycle when developers have built beyond demand.”