The data center real estate market is growing rapidly nationwide, and that is especially true in New Jersey. According to the New York Times, the New Jersey data center market is one of the most coveted in the United States.
According to the Times, office lease rates can reach $150 per square foot. However, the same amount of square footage in a New Jersey data center space can be worth up to $600 as reported, which our research suggests under-reports the actual figure which can be as high as $1,000 per square foot for comparable “Class A” space.
While the mainstream media report on the plight of mainstream commercial real estate investors and sensationalizing the hollowing out of industry, the data center market is quietly renewing the market. Formerly discarded semiconductor clean rooms or pharma manufacturing sites are being converted to data centers virtually overnight with positive results for municipalities.
Recent data center real estate transactions have boosted the New Jersey real estate market overall, including transactions for sentinel data centers, I/O data centers, QTS, Coresite, and in July, a Florida-based real estate investment trust purchased a 67,000 square foot colocation data center in Leonia, N.J., for $14.8 million, The Record reported.
While some of the top New Jersey data center locations may not seem as though they should be as expensive as they are, these centers can demand a high price due to their proximity to financial centers such as the New York Stock Exchange.
“The story shows that, like in all real estate, finding a home for your servers is all about location, location, location,” GigaOM contributor Jordan Novet wrote in May. “In this case, it’s not school districts or an urban core drawing customers – it’s proximity to data. As we’ve explained, there are benefits to locating auxiliary data and services in close proximity to big repositories of financial data. It can keep latency (and bandwidth costs) low, while making big-money trades as speedy as possible and rapid data analytics as close to real time as can be.”
Furthermore, all signs point to continued rise of the New Jersey data center real estate market despite concerns brought about by Hurricane Sandy. As the storm brought heavy winds and flooding, many data centers in the region were knocked offline for up to days at a time. Considering how vital these facilities have become to enterprises, this amount of unplanned downtime proved immensely expensive.
Despite these concerns, data center real estate in New Jersey remains in demand. So long as New York City remains as a central commercial hub for corporations, a New Jersey data center will likely remain a hot commodity. IT networks are more vital than ever for businesses, which means that data centers will remain a valuable asset for companies in New Jersey and nationwide.
“It could be that data gravity begets data center construction,” Novet wrote. If that’s the case, places such as New Jersey could see data center construction for years to come.”