Sandy boosts interest in data center space, especially in Rockland County

New York /
Feb.February 22, 2013 03:30 PM

Before Hurricane Sandy, signing an office lease meant considering cost, size, condition, landlord, maybe the neighborhood. Today, storm-wary tenants are asking another question, a powerful one, if you will: What electrical grid is the building on?

Sandy knocked out power to hundreds of businesses, costing them millions in downtime. Two of the hardest hit sectors: media and financial services, which both rely heavily on computers for their day-to-day operations.

Gawker Media, the Huffington Post and Buzzfeed.com, for example, were offline for days when the storm’s strong winds and torrential rains knocked out the servers at Datagram, at low-lying 33 Whitehall Street.

Datagram’s vulnerability to flooding has the companies, along with scores of other businesses, rethinking their data and disaster recovery center requirements, brokers told The Real Deal.

“Hurricane Sandy made everybody painfully aware of this problem,” said John Stoddard of Jones Lang LaSalle, who has represented tenants in large data center leases.

The choices are limited, though. Companies want a location close enough to New York City that employees can get there during an emergency but far enough away that it is on a different power grid.

One place that fills the bill is Rockland County, 15 miles northwest of Manhattan.

“The only time the electricity has been down here was during the blackout [of 2003],” said Tim Jones of Glorious Sun Robert Martin, owner of Blue Hill Plaza, a 1.1 million-square- foot data center and back-up space in Pearl River, N.Y.

Brokers are reporting an uptick in interest in the suburban area, where electricity is not only reliable but cheap.

“We’re seeing a lot more activity in Rockland County,” said Martin Cottingham of Avison Young, an exclusive broker for 1 Ramland Road, a new 232,000 square-foot data center and disaster recovery center in Orangeburg, N.Y. “One of the things we’ve found most appealing is the cost of electricity… — $0.08 per kilowatt hour compared to $0.18 in New York City, or $0.12 or $0.13 in New Jersey.”

While Rockland County’s appeal is on the rise, Long Island and New Jersey — areas that also have data centers — are struggling. Long Island has lost its luster because of the Long Island Power Authority, taken to task by Gov. Andrew Cuomo for its slow response times, and New Jersey because of its generally expensive electric rates.

“People don’t want to go to Long Island for obvious reasons,” said Andrew Popik, president of Datastructure Management, who has operated data centers in Rockland County. He added later: “There is a lot of back up in Jersey City, (but) that’s something we would never recommend [to prospective tenants].”

The demand is also coming from industries such as health care that haven’t traditionally used data centers, brokers said.

Still, the uptick in interest will eventually ebb, Popik predicted.

“There are a lot of people calling. We call it ‘the half-life of pain,'” he said, explaining that worst-case scenarios are fresh in tenants’ minds immediately after a natural disaster like Sandy.

The memories are sure to fade, though.

“If I had had half- a-million square feet of [data center] space available the day after the hurricane, I wouldn’t be talking to you, because I would be on an island.”


Related Articles

arrow_forward_ios
JLL CEO Christian Ulbrich (Getty)

JLL says hasn’t seen “anything worth spending our…money on” after reportedly passing on Cushman

JLL says hasn’t seen “anything worth spending our…money on” after reportedly passing on Cushman
JLL CEO Christian Ulbrich and CBRE CEO Bob Sulentic (Getty; CBRE; Pixabay)

JLL, CBRE keep cutting as recovery drags

JLL, CBRE keep cutting as recovery drags
Brock Emmetsberger, Tom Gammino and Will Suarez (JLL)

JLL makes cuts to I-sales team

JLL makes cuts to I-sales team
The Vitre at 302 East 96th Street with Wonder Works Construction's Joseph Klaynberg and Daniel Klaynberg (Google Maps; Wonder Works)

Wonder Works’ UES condo being shopped at foreclosure sale

Wonder Works’ UES condo being shopped at foreclosure sale
The Real Deal founder and publisher Amir Korangy and Massey Knakal founder Bob Knakal

JLL’s Bob Knakal on the future of New York

JLL’s Bob Knakal on the future of New York
Former JLL employee sues alleging toxic “boys club”

Former JLL employee sues alleging toxic “boys club”

Former JLL employee sues alleging toxic “boys club”
JLL CEO Christian Ulbrich (Ulbrich by Jemal Countess/Getty Images for Women's Forum of New York)

JLL profits halved by pandemic

JLL profits halved by pandemic
(iStock)

Look out below: Major real estate services firms brace for falling earnings

Look out below: Major real estate services firms brace for falling earnings
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...