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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Stephen DeSimone, Chairman and CEO of DeSimone Consulting Engineering, shared, “As DeSimone continues to grow internationally, we are thrilled to bring on Darren, Deborah, and the entire DP Squared team. Their extensive experience in structural design, impressive work across major projects, and client-centered approach will enrich DeSimone’s capabilities throughout the UK/European region.”

Based in Hebden Bridge, England, DP Squared launched in 2004 and has maintained a strong presence in the North of England. The firm brings with them a wealth of experience in Manchester and has designed five out of six of Manchester’s tallest buildings. Their portfolio includes the 66-story Deansgate Square tower, the tallest building in the UK outside of London. Additionally, DP Squared has worked on more than 800 projects, ranging from refurbishing listed buildings that regenerate local communities to transformative infrastructure projects and tall buildings that diversify city centers.

Darren and Deborah Paine, directors at DP Squared, commented, “DP Squared is a family that we have nurtured through its teenage years, and now it is time for it to fly and grow. By joining DeSimone, we will leverage our new partners’ global knowledge and resources to better deliver for the company’s clients worldwide.”

With the acquisition, DP Squared will operate as DeSimone Consulting Engineering UK from its current office Hebden Bridge while Darren and Deborah will join the senior management team at DeSimone in the UK. DP Squared’s local experience and client portfolio, when teamed with DeSimone’s global capabilities and resources, will position DeSimone to take full advantage of the growth currently taking place in the North of England.

DeSimone Consulting Engineering is one of the world’s pioneering specialists in the construction industry providing superlative expertise in several areas, including structural engineering, façade consulting, integrated design and detailing, and construction consulting services. With over 13,000 projects in 60 countries, DeSimone’s completed projects include the Wasl Tower in Dubai, the famed residential tower One Thousand Museum alongside Zaha Hadid Architects, the Grove at Grand Bay twisting towers with Bjarke Ingels Group (BIG), and the Statue of Liberty Museum in the US.

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The designation makes Bronx Logistics Center the East Coast’s first distribution warehouse with a LEED Platinum rating, with only nine other distribution buildings throughout the entire United States achieving the USGBC’s highest rating.

The project, scheduled to deliver this year, has made an unprecedented commitment to sustainability that further differentiates it from peer developments in the New York City market and across the country. Bronx Logistics Center will contain its own Con Edison electrical substation housed within its walls, providing power for up to 100% of its structured parking stalls to accommodate electrical vehicle (EV) charging and future EV tractor-trailer charging. Additionally, the project will feature a 2.9-megawatt solar array on the building’s rooftop, making it one of New York City’s largest private sources of renewable energy.  

Bronx Logistics Center also includes various sustainability-oriented design features that prioritize the building’s impact to the neighborhood and the building’s future workforce. The property will include bicycle storage rooms, smart metering for managing water usage, light fixtures intended to limit light pollution, and MERV-13 filters to improve indoor air quality, among other green power and carbon offsets.

Apart from its pioneering emphasis on sustainability, Bronx Logistics Center has similarly set a new standard for New York City’s industrial specifications. The project includes 32-foot clear heights, two exclusive site entrances for 585,000 square feet of warehouse space, and nearly 17 acres of parking and truck court areas accommodating over 1,500 parking spots. At 1.3 million square feet, Bronx Logistics Center sits on 14.2 acres in the South Bronx, a site that was assembled through five separate parcels.

Locationally, the project benefits from walkability to numerous MTA bus stops and a five-minute walk to the subway’s 6-train. The site is adjacent to Bruckner Boulevard and I-278, making it a short drive away from Manhattan’s Upper East Side, with immediate connectivity to I-95, I-87, and I-295.

“We wanted to approach the design and development of Bronx Logistics Center mindfully with respect to sustainability, which can be quite impactful for a project of this scale,” said Turnbridge Managing Principal Ryan Nelson. “We were already thrilled to be introducing state-of-the-art, Class A industrial product to New York City, but we’re incredibly proud to be able to couple that with industry-leading sustainability for both the city and the country.”

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“New Jersey remains one of the nation’s leading centers of life science innovation and the Princeton West Innovation Campus sits at its heart,” said Joel Bergstein, President of LEG, one of the Northeast’s leading full-service real estate companies. “We are excited to move forward with our plans to further enhance the property with the type of advanced R&D and manufacturing space the industry demands.”

The announcement comes following the lease of 56,000 square feet of space at the property to Enzene Biosciences, a global biotech company based in Pune, India. Enzene Biosciences leased the entire West wing of Building 21 at the multi-purpose R&D campus to create a state-of-the-art biopharmaceutical manufacturing plant that will facilitate an expansion of its manufacturing capabilities to serve North American clients.

A JLL team led by vice chairman Dan Loughlin, managing director Bob Ryan, senior managing director John Buckley and executive managing director Jim Medenbach, serves as exclusive marketing agent for the property and represented ownership, along with LEG’s Sr. Director of Leasing, Ken Flynn, in the lease with Enzene Biosciences. The tenant was represented by JLL managing director Jason Benson and senior managing director Dan Spero.

“We are thrilled to welcome Enzene Biosciences to the Princeton West Innovation Campus at a time of heightened demand for specialized life science facilities in the region,” said Loughlin, who noted that the ownership group also has the ability to upgrade two existing buildings for an additional 106,000 square feet for modern R&D lab and manufacturing uses.  “The property offers life science companies robust existing utility infrastructure, development entitlements in place, a secure state-of-the-art location ideal for continued innovation and speed to market opportunities.”

A former Bristol-Meyers Squibb (BMS) facility, Princeton West is a multi-purpose R&D campus of 33 buildings situated on 433-acres centrally located between New York City and Philadelphia, along the Boston to Washington D.C. Northeast Corridor of AMTRAK rail and less than five miles from the East Coast’s main Interstate Highway, Interstate 95.  The property is already home to several leading global companies, including PTC Therapeutics, BeiGene, Princeton University, Passage Bio and Gennao Bio who benefit from the campus’ robust utility infrastructure, including an on-site substation with dual 69kv electric feeds, 18 inch main water line and an on-site N-4 Industrial Waste Water Treatment Plant.

In addition to the specialty manufacturing and R&D offerings, the campus has over 250,000 square feet of available office space, and an amenity package that includes a full-service café, large fitness center, common conference space and walking trails. Some 200 acres of the site are dedicated to preserved farmland and open space on Pennington-Rocky Hill Road in Hopewell Township.

According to JLL’s Q1 2023 New Jersey Life Sciences Insight, flight-to-quality has been a recurring theme of the industry, as established companies including AbbVie, Bristol Myers Squibb and Sanofi have relocated within the state into high-end spaces to accommodate new workplace strategies.

Said Ryan, “New Jersey has one of the most highly educated, highly skilled workforces in the U.S.  including the highest concentration of scientists and engineers in the world. Its established life sciences ecosystem presents invaluable opportunities for collaboration and the state’s business-friendly environment supports growth in the sector.”

 Lance Bergstein, Managing Director of LEG, added “The collective team thanks ChooseNJ, BioNJ and the NJEDA for their support and guidance in attracting Enzene Biosciences to New Jersey.  We anticipate continued demand from companies who can utilize the property’s existing infrastructure and embrace its prime location along New Jersey’s life sciences corridor.”

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Building 114 is a 100,000-square-foot facility tailored towards the life sciences and pharma manufacturing sectors.  Its core and shell can be delivered ready for tenant fit-out within six-months of lease signing to meet demand within the sector for well-located, high-quality space with access to the region’s top-ranked higher education institutions and skilled workforce.

The facility will feature 100,000 square feet of space with abundant natural lighting and ventilation from expansive factory windows and skylights throughout the interior roof areas. Ceiling heights will range from 18-to-24 ft. with 75 ft. column spacing. The building roof is suitable for solar PV, with its shape able to provide increased production from reflected light.

“The unique needs of the life science sector make Building 114 an ideal location,” said  David Henderson, principal of Hx2 Development.   “We will deliver the property ready for a custom buildout at a time when leading companies continue to actively pursue Class A R&D and lab spaces in one of the nation’s most competitive life sciences real estate markets.”

JLL managing director Thomas Romano added, “As the development of new space remains burdened by high land costs and administrative hurdles, Roebling Center presents an ideal solution to forward-thinking life science companies seeking specialized facilities in an urban enclave with tremendous accessibility and diverse neighborhood amenities.”

According to JLL’s Q1 2023 New Jersey Life Sciences Insight, flight-to-quality has been a recurring theme of the industry, as established companies including AbbVie, Bristol Myers Squibb and Sanofi have relocated within the state into high-end spaces to accommodate new workplace strategies.

The announcement comes following a lease with marketing consultancy, Taft Communications, Building 110. Taft signed a five-year lease to occupy a 4,794-square-foot first floor suite, joining environmental engineering firm Princeton Hydro, which occupies the entire 9,041-square-foot top floor. JLL, which serves as exclusive agent for the Roebling Center, is now marketing the remaining 10,000 square feet of available space in that building to creative tenants.

Thomas Romano, the JLL managing director leading the marketing effort, commented, “Taft is a perfect addition to this diverse, vibrant and growing community and we are thrilled to now be moving forward with the redevelopment of Building 114. It will offer tenants a custom space within an evolving live, work, play community in a region populated by skilled workers and surrounded by unrivalled transportation options that offer easy commuting options.”

The Roebling Center is immediately adjacent to the Hamilton Avenue station of the RiverLINE light rail line and proximate to the Trenton Transit Center which links four major rail lines with service to New York City, Newark Airport and Philadelphia, and AMTRAK, servicing the entire country. Located at the Hamilton Avenue intersection of Route 129, Building 114 has easy access to Route 1, Route 195, Route 295 and the NJ Turnpike.

The property is surrounded by multiple bicycle and pedestrian paths and minutes from Delaware & Raritan Canal State Park, a 70-mile linear, multi-use path along a historic canal. A historically Italian neighborhood, Chambersburg has evolved into a diverse community of boutiques, restaurants and grocery stores, with the Roebling Market located directly across the street.

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Other founding members include Clark, DPR, and Ryan Companies, with additional members now including Granite, Kiewit, Mortenson, and Turner.

“The AGC Task Force unites some of the biggest construction companies to support the industry’s decarbonization efforts,” said Myrrh Caplan, national vice president of sustainability at Skanska USA Building and chair of the AGC Task Force on Decarbonization and Carbon Reporting. “The committee will develop a guidebook to help contractors understand how to calculate and report emissions, and how to set actionable goals as they play an instrumental role in addressing climate change. We look forward to being part of a process that reduces the industry’s environmental impact and creates more resilient communities.”

The construction industry and the built environment are responsible for nearly 40 percent of global carbon emissions that impact climate change. Contractors are increasingly exploring efforts that reduce their carbon footprint including changes in their operations, adoption of new policies, and investments in new technologies. Skanska understands the construction industry’s responsibility to take action and has consistently led industry decarbonization and sustainability efforts.

Globally, Skanska aims to achieve net-zero carbon emissions along its entire value chain by 2045, with a 70% reduction in controlled emissions by 2030. From 2015 to 2022, Skanska achieved a 55 percent reduction of carbon emissions from its own operations (scope 1 and 2). In 2019, Skanska alongside the Carbon Leadership Forum and other partners, helped create the Embodied Carbon in Construction Calculator (EC3 Tool), to calculate and evaluate the embodied carbon within a wide array of building materials. The partnership made the tool “open-source” to democratize data and provide transparency as companies and governments aim to achieve their carbon reduction goals.

More About Decarbonization

·       Decarbonizing Construction

·       Shifting to Sustainable Building Materials

·       Skanska Sustainability

·       Skanska Mass Timber

·       Skanska Annual and Sustainability Report 2022

·       Skanska Conceives Solution for Calculating Embodied Carbon in Construction Materials, Announces Transition to Open-Source Tool

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The full-service 12-story residential building will be designed by renowned architecture firm DXA Studio, and feature stunning layouts, finishes, and top appliances. Designed and programmed with modern living in mind, the building will offer a robust suite of services and amenity spaces. Designed by Paris Forino, common spaces will include a building roof deck and garden, coworking space, conference and media rooms, as well as a fully-equipped fitness center with steam room and sauna. 

“This project brings highly-amenitized living to Kip’s Bay in a way we’ve not yet seen,” said Shaun Osher, CEO of CORE Real Estate. “We’re catering to a new clientele in Kip’s Bay, providing joint spaces for work, play, and beyond. We are delighted to lead the sales and marketing of this incredible new residential building.” 

“Community spaces and interconnected living is more important today than ever before, and this one-of-a-kind, custom-tailored project fully realizes that philosophy,” said Bentley Zhao, Chairman and CEO of New Empire Corp. “We are thrilled to bring this exciting new project to life with such an incredible, world-class team.”

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Four years after fire ravaged the historic Bergen County mill, 1 Market Street will be transformed into a prominent logistics hub, able to accommodate companies seeking modern logistics space in one of the country’s tightest industrial markets.

With a highly visible location just off Exit 61 of I-80, the speculative new development will feature 40-foot clear ceiling heights, 32 loading docks, two drive-in doors, and parking for 56 trailers and 198 cars. The fully sprinklered facility will have 7-inch-thick concrete floors designed to accommodate heavy goods and machinery across the space, and feature a design that reflects the iconic architecture of the former manufacturing facility that once stood in its place.

Situated just 17 miles from Manhattan, 1 Market Street offers direct access via I-80 and I-95 to the largest consumer base in the United States. The facility is scheduled to be delivered in August of 2023.

“We are thrilled to begin building this state-of-the-art new facility that will transform the former Marcal site into one of the region’s most advanced logistics offerings,” said Clark Machemer, Crow Holdings Development’s Senior Managing Director for the Northeast region. “1 Market Street will not only create jobs and contribute to the growth of the county’s economy, but it will also provide much-needed logistics space in one of the country’s most land-constrained markets, delivering a bright new future for the town and this historic site.”

After a fire in 2019 destroyed 90 percent of the old Marcal factory, the site re-opened as a smaller plant a year later. Texas-based Crow Holdings Development acquired the 11.87-acre site in 2022 and, in a joint venture with Atlas Holdings, Marcal’s majority shareholder, expects to generate $34 million in economic activity and 140 short-term jobs during construction. Once complete, 1 Market Street will produce $630,000 in property tax payments to the county, Elmwood Park, and the borough school district and support the equivalent of 240 full-time jobs.

JLL, which handled the sale of the property, is serving as the exclusive agent for 1 Market Street. A team that includes David Knee, Chris Hile, Ignatius Armenia and Ryan Milanaik is marketing the property among e-commerce and logistics occupiers increasingly under pressure to move goods competitively and quickly.

“Despite macro-economic headwinds, the New Jersey industrial market remains resilient as 3PL’s, food and beverage, and consumer goods companies seek well-located, modern facilities in close proximity to the world’s major population hubs,” Knee said. “1 Market Street will reinvent a historic factory into an economic engine of the 21st century, generating jobs, contributing to the local tax base and meeting market demand for effective logistics solutions.”

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The 10.75-acre property is located within the prestigious Long Island Innovation Park at Hauppauge and is less than one mile from Long Island Expressway (I-495) and a half a mile from the Northern State Parkway. The strategic location will provide future tenants with direct access to the nearly eight million people in Brooklyn, Queens, Nassau County and Suffolk County, as well as convenient access to the greater New York metropolitan region.

Construction of the project is currently on track for completion next month in June 2023.  The fully-secured logistics facility features a 36-foot clear height in the warehouse, 31 dock-high loading doors, two 12-foot wide drive-in loading ramps, as well as 205 employee parking stalls and 16 trailer parking stalls. There is also expansion space to add additional car or truck parking stalls, if desired. The office space in the building will be built-to-suit to meet all future tenants’ custom specifications. Bristol engaged IGC to provide general contracting services for the project.  

“The Town of Smithtown has been a great partner in our diligent efforts to repurpose a blighted and obsolete pharmaceutical property into a brand-new logistics facility that meets all the requirements of today’s sophisticated warehouse users. This strategic area of Central Long Island is highly underserved in terms of modern industrial buildings and we’re very excited to deliver the first high-cube warehouse development in the highly sought-after Hauppauge area,” said Dave Williams, Managing Director of Bristol Group, Inc., who is based in the firm’s headquarters office in San Francisco.  

The project is being marketed for lease by the JLL Long Island industrial team of Doug Omstrom, Max Omstrom, and Tom DiMicelli.  

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Located at 110 Tices Lane just off Route 18, the Middlesex County community will feature 520 luxury rental apartments and townhomes. 

“With Legacy Place, we are creating a lively, pedestrian-centric, town-center-style development that combines luxury rental residences with retail and state-of-the-art amenities,” said Garden Communities’ Scott Loventhal, managing director. “It’s exciting to see our vision for this project coming to life.”  

Legacy Place features a mix of one-, two- and three-bedroom residences. Two urban-style apartment buildings with garage parking and 18,000 square feet of ground-floor retail will front on Tices Lane. More suburban-style apartments and townhomes will be located toward the rear of the 25-acre site. Legacy Place will be developed in three phases.  

A 5,000-square-foot clubhouse at Legacy Place will house the community’s on-site leasing and management office. It also will feature a state-of-the-art fitness center, a great room, a lounge and private workstations. A resort-style swimming pool, an outdoor kitchen and grilling stations are among the community’s outdoor amenities. The grounds will include walking paths, plenty of open space, a dog park and a central square for residents to gather, along with several pocket parks for residents to enjoy.  

Shuttle service will transport Legacy Place residents to the nearby East Brunswick bus terminal, which offers direct non-stop service to Manhattan. Additional highlights include East Brunswick’s top-rated public schools, exceptional municipal services, and proximity to area malls and retail along Route 18. A new township ice skating/hockey rink is being built adjacent to the property. Rutgers University, regional corporate campuses and employment centers, and respected medical institutions are just minutes away. 

To join the growing Legacy Place interest list, visit GardenCommunities.com. 

As one of the region’s most active developers in its high-end niche, Short Hills, N.J.-based Garden Communities has a robust multifamily project pipeline that will introduce dozens of new communities in the tri-state area over the next several years. The company is recognized for its responsive, hands-on approach to property operations, and its focus on meeting the needs and desires of modern renters. 

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