January 12, 2022LAW360
Law360 (January 12, 2022, 6:19 PM EST) -- American Real Estate Partners and investment management firm Harrison Street are teaming up to build six data centers in Virginia in a deal worth $1 billion, the companies announced on Wednesday.
The firms, which are already working on a separate data center project, plan to build the six additional data centers in Ashburn and Arcola, Virginia, located in the so-called Data Center Alley due to the heavy concentration of data centers there.
The firms said the six centers will have a combined 2.1 million square feet, with each center having between 265,000 and 440,000 square feet.
"As demand for data centers continues to far outstrip current capacity, AREP is focused on developing assets that expand data availability and connectivity," Doug Fleit, American Real Estate Partners' CEO, said in a statement on Wednesday. "Since partnering with Harrison Street in January 2021, we have executed on our commitment to acquire powered shell assets at scale for large cloud providers and colocation users in the Northern Virginia market."
Plans call for four data center buildings at AOL's former headquarters on Pacific Boulevard in Ashburn as well as two buildings on Arcola Boulevard, close to Dulles International Airport.
Yahoo currently operates that former AOL headquarters site, while the Arcola Boulevard site is across the street from a new development Google is doing.
Harrison Street is based in Chicago and also has offices in San Francisco, London and Toronto.
"Digital real estate is a core pillar of Harrison Street's demographically driven investment strategy, and we are thrilled to significantly expand our presence in the world's most active data center market," Michael Hochanadel, managing director and head of digital real estate at Harrison Street, said in a statement on Wednesday.
"This transaction, in partnership with AREP, provides us with unique data center campuses and immediate scale in an attractive network-dense region ensuring hyperscale cloud providers and high-quality colocation operators have the capacity they need to support their customers," Hochanadel added.
Since the companies partnered in early 2021, they have already broken ground on a separate data center project, a two-story, 265,000-square-foot facility on Loudoun County Parkway in Ashburn, Virginia.
The firms bought the site for that project in early 2021.
American Real Estate Partners is based in McLean, Virginia.
"Speed to market is a key factor that attracts the most demanding hyper scale tenants today," Greg Rowles, American Real Estate Partners' managing director of development, said in a statement on Wednesday, highlighting the speed with which the companies moved on the Loudoun County Parkway project.
The joint venture is represented by DLA Piper, while AREP also had counsel from Arnold & Porter.