A data center site in the Los Angeles area fetched nearly $50 million as developers race to meet demand for digital space.
Real estate investment trust Digital Realty bought a 5.4-acre property in Vernon for $48.8 million with plans to build a data center on the site, Bisnow reported. The price amounts to $9 million-plus per acre.
An entity tied to 4D Development and Investments founder David Pourbaba, was the seller.
The 235,000-square-foot site is at 4400 Pacific Boulevard. A data center from Prime Data Centers is under construction across the street.
Vernon has become a hotspot for data centers in recent years thanks to its electric utility structure that allows the city to offer power at lower prices than many other municipalities in the Los Angeles region.
Prime Data Centers, for example, has already taken advantage. The Dallas-based firm opened a 243,000-square-foot data center in the city last November. Denver-based data center developer CoreSite bought a 7-acre site in Vernon for $61.5 million last September.
Digital Realty’s move comes two years after the company floated a plan to replace a parking garage at 727 Grand Avenue in downtown Los Angeles with a data center. Where that project stands is unclear.
The Klabin Company’s Frank Schulz, Zach Middleton and Max Farkas represented Digital Realty in the deal, while Pacific Santa Fe Industrial was represented by David Brandt and Jake Poxon of Lee & Associates.
The artificial intelligence sector has been raking in tens of billions of dollars in investment as data centers become attractive pieces of property across the country.
Despite some fears of a potential AI bubble bursting, major data center users like Amazon, Microsoft, Google and Meta are ramping up their AI investments, dropping more money on centers rather than paring back investments out of caution.
Capital expenditures from those large-scale users increased more than 18 percent in the third quarter from the previous quarter.
Read more
Development
Los Angeles
CoreSite wants to expand footprint downtown with second big data center
Commercial
Los Angeles
Prime opens 243K sf data center in Vernon leased to two AI firms
Commercial
Los Angeles
Digital Realty eyes DTLA parking garage for data center