The first half of 2023 finished with record absorption as hyperscalers, financial firms, healthcare companies and other major enterprises raced to secure data center space. Most of the supply that will be delivered in the third and fourth quarter of 2023 has already been preleased or is under exclusivity. Due to primary market power constraints, supply coming online in 2024 will also be preleased, resulting in limited options for users who are not in the market far in advance of their preferred go-live date.

 “The data center industry is continuing to experience explosive growth in demand which is leading to completely sold-out primary markets, secondary market expansion and the development of newer tertiary markets,” said Andy Cvengros, Managing Director, JLL. “Major markets and most secondary markets have reached a state of supply and demand imbalance; the development timeline for new data centers has grown to three to five years – or more in some cases. If you want a new data center within that timeframe, start planning for it now, as we don’t see any sign of this demand slowing or the power situation getting any better.”

When it comes to primary data center markets, Phoenix and the Northwest have outpaced Northern Virginia as the leader in absorption with 194.5 MW and 185.9 MW, respectively, compared to 184 MW for the first half of 2023. Primary markets already have a limited inventory of colocation space, leading data center operators to increase pricing by up to 20 to 30%. JLL Research anticipates secondary markets, including Columbus, Salt Lake City, Reno and Austin, to continue to support the overflow from these constrained primary markets.  

 AI changes everything

AI is expected to accelerate this demand as more and more industries adopt AI as a tool to achieve corporate objectives. The last three years have seen massive investments in AI and machine learning through venture capital, private equity and M&A. So far, 2023 has seen $32 billion in investments through Q1.  

“AI implementation requires significant computing power and resources, which translates to increases in leasing,” said Kari Beets, Senior Manager, Research, JLL. “AI needs also require higher power densities which require additional infrastructure in most data centers.”

 Additionally, the demand for edge computing is accelerating. Generative AI, like ChatGPT, is also driving demand for edge computing requirements, as cloud companies are leveraging edge to enhance scale and deliver AI applications for faster, better responses.

AI models are also changing data center infrastructure, with some large requirements driving densities to 50-100 kW per rack. Many colocation providers have adjusted the voltage delivered to the floor to 415 volts, which can reduce the upfront cost of delivering power to these high-density clusters.  

 “Data centers are massive power users and require significant efforts to keep cool,” said Matt Landek, Managing Director, Data Centers & Telecom, Work Dynamics, JLL. “Given hyperscaler and colocation provider sustainability goals, the data center industry will need new innovations to improve cooling and energy efficiency for AI uses.”  

Data center investment market remains strong

Even with a high interest rate environment, data center lender and investor demand remain strong, a bright spot for the capital markets. The sector is still attracting a variety of lenders, including life companies, banks, debt funds and CMBS/SASB, and the record-setting M&A activity of the last two years in the data center sector continues, with a flurry of recent major announcements.

“Evidence of growing investor demand is apparent when analyzing the trend of M&A valuation and EBITDA multiples, which is, simply put, a measure of a company’s return on their investment,” said Carl Beardsley, Managing Director, Capital Markets, JLL. “In the trailing 12 months, EBITDA multiples have averaged 26.5x versus an average of 23.2x since January 2017, meaning that investment value is increasing.”

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Located at 2140 North John Young Parkway in Orlando, the industrial site spans 3.53 acres with convenient access to the area’s major highways: I-4 and 408 Expressway. The tilt wall structure is scheduled to be delivered in the first half of 2024.

“Central Florida has had immense growth over the last few years with many major businesses setting up shop locally and we are excited to partner with MSI on their first project in the area,” said Brian Sudduth, President of Miller Construction. “Our firm plans to execute our construction plan efficiently with top-notch service and reliability for our client.”

The warehouse will have 25 columns with 50-foot by 54-foot spacing, 29 parking spots, 13 dock doors (some with recessed truck wells for deliveries), full warehouse lighting, exhaust fans and louvers. Miller will also include tenant buildouts of four private office spaces and one open office space measuring roughly 9,500 square feet. Additionally, Miller’s team is installing a unique internal crane rail system to lift and move flooring and countertop products around the warehouse.

MSI has valued Miller’s preconstruction team during the planning process as the site is extremely tight for a tilt-wall construction project. Precision will be key for the team with only about eight feet of clearance between the neighboring Tesla Dealership on the south side of the property line.

The project team includes Eleven18 Architecture, Construction Engineering Group (MEP), Gutherman Structural Inc. (structural) and NV5 (civil).

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“Today’s historic approval by the Local Development Corporation is yet another example of how we are working with our not-for-profit community in securing tax-exempt bond financing benefits that are provided at no cost or risk to the taxpayers of Westchester County. This magnificent new project will further enhance our County’s world-class healthcare sector while providing a boost to our region’s economy,” said Westchester County Executive George Latimer.

“The Local Development Corporation is very pleased to approve the bond financing for this very important healthcare development at the Westchester Medical Center campus. As a result, nearly 900 construction jobs and new full-time jobs will be created and the County will receive more than $3.5 million in total economic benefits,” said Local Development Corporation Chair Joan McDonald.

“The LDC has a clear vision for the future of Westchester County, and we’re happy that vision includes projects such as the Patient Care Tower,” said Michael D. Israel, President and Chief Executive Officer, Westchester Medical Center Health Network (WMCHealth). “The Patient Care Tower on the Westchester Medical Center campus will be the Hudson Valley’s hub of critical care medicine as it will bring together critical care and medical-surgical specialties in one location, enabling Westchester Medical Center to convert to all private inpatient rooms across the rest of the campus. Additionally, the Patient Care Tower will advance our academic mission by giving medical residents and students a state-of-the-art facility in which to train.”

According to a cost benefit analysis prepared for the LDC, the project would provide the County with total benefits of $3,531,780 over 30 years. The total benefits are comprised of $722,468 in sales tax revenue from construction; $2,528,062 of sales tax revenue from operations over 30 years, and $281,250 in fees to be collected by the LDC based on the bond proceeds. The project is also estimated to create more than 770 construction jobs and 127 new full-time jobs.   

The $221.3 million Patient Care Tower project would feature a five-story, 128-bed structure with all of its inpatient rooms ICU-equipped and a patient-centric design with leading edge amenities that will create a soothing, healing environment. It will house vital services for WMCHealth patients and their families including trauma, neurosciences, cardiology and general surgery.

The Local Development Corporation assists Westchester not-for-profit organizations in securing tax-exempt bond financing benefits. These benefits are provided at no cost or risk to the taxpayers of Westchester County. Since its inception in 2012, LDC has assisted not-for-profit organizations in securing tax-exempt bond financing totaling over $500 million.

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Located near the intersection of Route 23 and Interstate 287 in northeastern Morris County, 110 Route 23 is a 14.51-acre, 133,032-square-foot component of Riverdale Plaza, a large retail power center. 110 Route 23 has been triple-net leased to BJ’s Wholesale Club, a leading warehouse club operator consistently offering 25% or more savings on groceries, general merchandise and ancillary items, and double-net leased to Staples, an office supply retail company and industry leader in workspace products like furniture, technology, cleaning products and traditional office supplies, since its construction in 1998. The active power center is shadow-anchored by Home Depot and Target.

The strategically located property casts a very wide trade with ideal accessibility to Morris, Passaic and Bergen counties via nearby Interstate 287. In addition, it has become a preferred shopping destination for residents in nearby Bergen County who are impacted by Bergen County Blue Laws that prohibit the sale of certain retail items on Sundays including electronics, clothing and furniture.

“110 Route 23’s combination of accessibility, visibility and in-place leases with two national tenants make it an ideal retail property in the current market,” said Kristofich. “We’re honored to represent the seller in the assignment, and we look forward to procuring a purchaser for this fantastic piece of real estate.”

To stay connected with NAI James E. Hanson and for updates on the latest transactions and news, please follow NAI Hanson on Facebook, Twitter and LinkedIn.

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The NYC-based firm, known for providing award-winning architectural services and specializing in quality sustainable design, will relocate its headquarters to a portion of the 27^th floor of the 35-story, 870,000 square-foot office tower as part of its 11-year lease. The practice is expected to move from its current 10,307-square-foot office at 55 Broad Street in the third quarter of 2023.

Rudin recently finalized the sale of 55 Broad Street to Silverstein Properties and Metro Loft Management, which intend to convert the building to 571 residential units. Rudin will retain an equity stake in the project.

“We are pleased to be able to accommodate Curtis & Ginsberg’s move to One Battery Park Plaza as 55 Broad Street embarks on its next chapter. Their decision to remain within our portfolio is indicative of Rudin’s history of creating long-term relationships with our tenants,” said Michael Rudin, Executive Vice President of Rudin.

“We are excited to stay in Lower Manhattan and look forward to expanding our space at One Battery Park Plaza, which will enhance our collaborative work environment and mission of providing designs that enhance communities,” remarked R. Darby Curtis AIA, Managing Partner of Curtis + Ginsberg.

One Battery Park Plaza was originally constructed by the Rudins in 1971 and features original architecture by Emery Roth & Sons and a renovated Italian marble lobby by Specter DeSouza Architects. Floor plates in the building range from 27,000 to 29,000 square feet and offer sweeping views of New York Harbor, the Statue of Liberty, Ellis Island, Governors Island, and Battery Park.

One Battery Park Plaza has achieved the WELL Health-Safety Rating, is WiredScore Platinum certified and utilizes Nantum, the world’s most advanced building operating system. Nantum OS is the flagship product of Prescriptive Data, a privately held smart building automation company focused on using artificial intelligence to improve efficiency, decrease carbon emissions and optimize tenant comfort.

This follows last year’s announcement of five new leases, totaling more than 100,000 square feet with SFA Agency LLC, Nationwide Mutual Insurance, the International Refugee Assistance Project, Abrams, Gorelick, Friedman & Jacobson, and Cullen and Dykman. Additional major tenants at the property include Hughes Hubbard & Reed, Seward & Kissel, Meridian Capital, The Partnership for New York City, the New York City Fire Pension Fund and CetraRuddy.

Kevin Daly, Vice President at Rudin, represented building ownership in the transaction. Curtis + Ginsberg was represented by Ruth Colp-Haber of Wharton Property Advisors.

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Oakland Heights Apartments is a 100 percent Project-Based Section 8 development made up of 15 buildings. The complex offers tenants a mix of one-bedroom, two-bedroom and three-bedroom townhomes with an amenity package featuring a clubhouse with community room, 200 parking spaces, laundry facility and a maintenance shop and garage. 

As part of the closing, Camber has signed a new 20-year Housing Assistance Payments (HAP) contract with the U.S. Department of Housing and Urban Development (HUD), which will preserve affordability at the complex for decades to come. Additionally, Camber will complete deferred maintenance and undertake sustainability and energy efficiency upgrades at the property.

“Affordability is a national issue, and our acquisition of the Oakland Heights Apartments will help to contribute to a more stable Connecticut and preserve quality homes for those families who need them the most,” said Rick Gropper, Principal at Camber Property Group. “We look forward to working with our residents to build an even better community at this complex, and thank our partners Cushman & Wakefield for their exceptional work on this closing.”

“Preserving quality affordable housing like the Oakland Heights Apartments is critical at a time when towns and cities across the country are feeling the effects of a housing affordability and supply crisis,” said Tell Metzger, Senior Vice President, Equity Investments at CPC. “With nearly five decades of experience in affordable housing finance, at CPC we understand that investing alongside partners like Camber is an investment in the long-term stability of the property, the community, and the future of the residents.”

“The property’s convenient location offers residents a premier living experience with immediate access to the area’s main business district as well as extensive shopping, dining and entertainment options,” said John Alascio of Cushman & Wakefield’s Equity, Debt & Structured Finance team. “The high-quality asset’s fantastic accessibility coupled with an experienced sponsor with success in the affordable housing space made this an exciting financing.” 

Oakland Heights Apartments is located near Interstates 84 and 91, providing connectivity to Downtown Hartford and the greater Northeast corridor. Additionally, it is within a short drive to numerous restaurants, malls and attractions across Manchester and Hartford. 

Cushman & Wakefield’s Equity, Debt & Structured Finance team of Alascio, Alex Hernandez, Chuck Kohaut, TJ Sullivan and Jason Blankfein represented the borrower in the transaction. The Fannie Mae loan was provided by Greystone. 

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JC&A has worked alongside LeftField Project Management, Hammel, Green & Abrahamson, and AHA Engineers to bring this project to life. Located at 300 Third Avenue, this state-of-the- art facility integrates BSL2 Lab & Vivarium space with sophisticated Class A office space, fostering synergy and innovation among researchers and office workers.

The collaboration signifies a significant milestone in the field of biomedical research, propelling Biocytogen Pharmaceuticals (HKEX: 02315) as a leader in integrated solutions for next-generation antibody drug development. The facility’s highlights include a climate-controlled 4,000 cage vivarium, advanced cell culture and procedure suites, and an open-concept design that encourages cross-disciplinary collaboration among teams and partners.

This achievement solidifies Biocytogen’s commitment to providing exceptional preclinical contract research services and distributing specialized animal model products (“BioMice”). These products are increasingly sought after by clients spanning North America and Europe. With an extensive portfolio encompassing over 500 strains of specialized mice, Biocytogen has positioned itself as a global frontrunner in humanized animal models. The facility’s cutting-edge resources, such as the flagship
RenMabTM model and second-generation RenMiceⓇ-based platforms,

empower researchers to explore novel antibody and cell-based therapeutics with diverse applications.

Reflecting on this accomplishment, Jeff Cameron, Partner and Project Executive at JC&A, expressed his enthusiasm, stating, “The completion of Biocytogen’s new facility is a testament to JC&A’s unwavering commitment to innovation in building within the life sciences sector. Our partnership with Biocytogen highlights our dedication to shaping the future of biomedical research by providing exceptional environments for groundbreaking discoveries.”

Biocytogen is the latest project in a portfolio that features complex projects for clients including Merck & Co, Biogen, Schrodinger, Inc, Lyra Therapeutics, TScan Therapeutics, and Affinia Therapeutics.

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Located near the interchange of Routes 4 and 17 as well as the Garden State Parkway, 18 West Passaic Street is a one-story, 7,724-square-foot office building with executive-covered parking and professional on-site management.

Tapped as the exclusive brokerage firm for the property, NAI James E. Hanson utilized its extensive list of local contacts to connect the landlord with prospective tenants and ultimately brokered a deal between the landlord and tenant. The tenant will relocate from Hackensack and utilize its new space to operate a State Farm agency and office.

“Transactions like this emphasize the importance of hiring an experienced commercial brokerage to lease available space,” said Kristofich. “Brokerages with an extensive background in the market and local contacts can open the door to a much larger pool of potential tenants. We’re proud to have helped the landlord fill space in short order while also assisting the tenant in relocating from their longtime location in Hackensack. We wish them both a successful and long-lasting relationship.”

18 West Passaic Street is an elevator building that also features covered parking. For remaining availabilities, contact Jonathan Kristofich at jkristofich@naihanson.com or 201-488-5800 x103.

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Chairman Kevin O’Grady and Managing Director Justin Neelis, both of Concord Summit’s Miami office, advised the borrower and sourced the financing.

The bridge loan will be used to repay the original construction loan and provide the borrower, Encore Capital Management, a long-time Concord Summit client, with cash out at closing.

The Promenade completed construction and started tenancy in December 2019 and 2020. Currently, the property is 100% leased with inline space and only one vacant pad space available for rent. Tenants include Sketchers, BurgerFi, Cold Stone Creamery, Studio Movie Grill, Fat Tuesdays, Ford’s Garage, among others.

“Sunset Walk is one of the most creative, thoughtfully designed master-planned entertainment destinations in the country, and we have financed many. The activity, culture, and draw are second-to-none. Concord Summit is pleased to help finance such a successful project and all its different components from the beginning,” Neelis said. 

The property is located on one of the busiest thoroughfares in the Orlando MSA (US 192) and is a very short distance from Walt Disney World’s Magic Kingdom, EPCOT Center, and MGM Studios.  Other major Orlando theme parks are minutes away.

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The stylish urban residential community is designed by globally renowned architecture firm, EDI International, with interiors by luxury design agency, Jules Wilson Design Studio. Vestra at UnCommons will ultimately offer a total of 352 units across three midrise towers, with 86 units of building two ready for move-in by October and the final building, with 219 units, available in early 2024. 

“As this was our first residential development, we had the opportunity to design this project with purpose and intention from a completely blank canvas,” said Jim Stuart, partner at Matter Real Estate Group. “Community is at the heart of all we do at UnCommons, and we developed ample common areas indoors and out to bring people together, including co-working spaces to keep the many people who work remotely or hybrid connected. Vestra also has one of the best “backyards” in the city, with 40-acres that offer beautiful outdoor common areas and some of Las Vegas’ best bars and restaurants found anywhere. “From the beginning we realized this was an extraordinary opportunity to bring Las Vegas a truly walkable neighborhood with a cool vibe unlike anything in town.” 

Vestra residents benefit from the same ‘human-centered’ principles that have distinguished the 40-acre UnCommons from the onset of construction. A mix of floor plans includes studios; one-bedroom, one-bathroom; two-bedroom, two-bathroom; and three-bedroom, two-bathroom units. Residences provide the latest smart home technology, including a control panel that gives remote access to smart door locks, thermostat, electrical switches and sensors. Each unit showcases quartz countertops and modern, flat-panel cabinets with under-cabinet lighting as well as walk-in closets, and a washer and dryer, plus private lockers for a dry-cleaning service. In addition, Vestra has a limited number of penthouse units that reflect the aesthetic, features and vibe of UnCommons, providing a distinct lifestyle for the most discerning resident. 

Alongside the upgraded private amenities, Vestra features a variety of upscale community features including a modern pool house, a resort-style pool and resort court with cabanas, fireplaces and BBQs. The community spaces also feature a large indoor/outdoor fitness center, lawn space, pet park and spa. Co-working spaces with “Zoom rooms” make it possible for residents to maximize their work-from-home experience, plus Vestra offers a multi-purpose “flex” lounge and a spacious media room. A 100% controlled access parking garage offers secure parking, plus electric vehicle charging stations. 

Unique to Vestra residents is their neighbors – some of the most buzzed-about projects in the Las Vegas Valley. UnCommons is home to the second-largest North America headquarters for DraftKings, in addition to other renowned companies like CBRE, Sotheby’s, Deloitte, EY, Morgan Stanley and more. Additionally, UnCommons houses several in-demand dining and lifestyle destinations, including The Sundry, a distinctive culinary experience by Michael Mina, Urth Caffe, Salt & Straw, Amari, SunLife Organics and more. In all, residents of Vestra will enjoy over 20 distinct food and beverage offerings literally outside their door.  

To learn more about Vestra, visit the leasing gallery at the UnCommons campus or visit the website at www.VestraLiving.com. For more information about UnCommons, visit www.UnCommons.com. 

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