Vantage Secures $350M Loan for Silicon Valley Data Center Hub

Vantage Data Centers has secured a $350M loan secured by a research building it owns in Santa Clara, financing it will use to convert the property into a 479K SF data center campus.

Paris-based Societe Generale provided the loan for Vantage as a deed of trust backed by the 7-acre site at 2590 Walsh Ave. First American Title was a neutral third party in the transaction.

Vantage acquired the 114K SF research building for $40M last year.

The inclusion of a neutral third party in the deed of trust will empower the transaction to supersede a $9.3M mortgage held by City National Bank on the research building since 2016.

The data center vacancy rate in Silicon Valley hit an all-time low this year at 1.3% at the end of Q2, making it the tightest market in the US for data processing, according to CBRE. Average rental rates were as high as $175 per kilowatt hour.

Vantage already operates two data center campuses in Silicon Valley, including a 21-acre, 335K SF facility in Santa Clara. The campus, with six data center buildings, offers 77 MW capacity. The company’s Santa Clara II campus, is a 9-acre facility with three data center buildings, also offering 77 MW of data processing capacity.

The company also operates data center facilities in Ashburn, VA—the heart of the largest data center cluster in North America—Phoenix, Quincy, WA, Montreal and Quebec City, in addition to campuses in Europe, Asia and South Africa.

In October, Vantage began the second phase of construction on its growing mega-scale campus in Goodyear, AZ, just outside of Phoenix. The  additional capacity is scheduled to be operational in the spring of 2024.

Once fully developed, the Phoenix campus will offer hyperscalers and large cloud providers 160MW of IT capacity across three facilities totaling more than 1M SF. Vantage is investing more than $1.5 billion into the project, which is expected to create approximately 3,000 construction and technology jobs.

Phoenix is the hottest data center market in the US, measured in megawatts of net absorption, as overall US market absorption surges past the total demand in 2021, according to the latest Data Center Outlook from JLL. Greater Phoenix, which topped the leaderboard in H1 2022 demand with 280 MW of absorption—more than 10 times the total absorption in the Phoenix market in 2021.

Northern Virginia’s absorption tally in H1 was 240 MW, followed by Seattle-Portland at 194 MW; Dallas-Fort Worth at 177 MW; Chicago at 99 MW; and Atlanta at 97 MW.

US market demand reached 1,087 MW in H1 2022, more than 95% of total demand in 2021. JLL attributed the surge to the adoption of hybrid work patterns and the ongoing explosion of streaming apps, as well as historically high pre-leasing activity.