QTS Realty Trust, an international provider of data center, managed hosting and cloud services, has purchased a 360,000-square-foot data center from DuPont Fabros Technology, Inc. in Piscataway. The facility becomes QTS’ third New Jersey data center, and strengthens its ability to serve Fortune 1000 enterprises, and companies in financial services, healthcare and technology in the Northeast. QTS purchased the existing 18 megawatt facility for approximately $125 million and will plan to add an additional 8 megawatts over the next few years. This represents an upfront cost per megawatt of below $7 million, which is materially below average cost to build in the New York / New Jersey market.
“Acquiring a strategically located facility at a competitive price aligns with our long-term growth strategy and has clear benefits for our customers and shareholders,” said Chad Williams, chairman and CEO – QTS. “We are confident that our flexible, scalable integrated services platform will continue to meet the needs of one of the nation’s largest Tier 1 markets.”
The LEED Gold certified data center sits on a 38-acre campus in close proximity to New York City’s global financial and business districts. The current facility has built-out capacity representing approximately 18 critical megawatts, and 88,000 square feet of raised floor data center space. QTS plans to strategically redevelop portions of the facility to expand its total raised floor capacity to 176,000 square feet and over 26 megawatts of critical power.
The facility’s current customers consist of a major pharmaceutical company, a large media company and several financial services organizations. Ongoing customers occupy approximately 56,000 square feet and 8.4 megawatts of the total available critical power, leaving room for both new customers and an immediate expansion of services.
While the acquired data center was previously marketed exclusively to wholesale customers, QTS plans to utilize its fully integrated technology services 3C platform of custom data centers, colocation and cloud and managed services. The 3C platform, combined with the company’s leading security and compliance capabilities, allows QTS to intersect customers in this high demand market.
QTS is confident that, with its cost advantage low-basis acquisition, it can drive incremental utilization and efficiencies, and support QTS’ target 15+ percent unlevered return on invested capital upon full stabilization.
The connectivity-rich facility is carrier neutral with 18 carriers, and serves as a point of presence for the Amsterdam Internet Exchange. QTS will develop the facility to support a wide range of power redundancy from N to 2N. The campus has solar panels that produce 2 megawatts of power, which aligns with QTS’ sustainability approach. The property also features an onsite 112kVA substation.
The mega data center will provide much needed capacity for QTS’ current and potential customers seeking secure and compliant colocation in the Northeast region, and aligns with its growth strategy. QTS has seen previous success in the greater New York / New Jersey market. QTS’ 32,000 square foot raised floor Jersey City data center is currently at 95 percent capacity. QTS Princeton, purchased in 2014, served as the catalyst to QTS’ strategic partnership with Atos, and its 58,000 square feet of currently developed raised floor data center space is also at capacity.