Commercial
Square Feet
A Tower’s New Owner Hears the Hum of Data
By JULIE SATOW
Published: February 14, 2012
The New York Telephone Company building at the foot of the Brooklyn
Bridge is not among the city’s most loved, to put it charitably. It was
built in 1975 as a switching control center for the phone company but
has been largely vacant for years, despite the large “Verizon” sign that
adorns its forbidding facade.
David W. Dunlap/The New York Times
The New York Telephone Company building at 375 Pearl Street, seen from the Brooklyn Bridge.
Come this fall, while the building may look much the same on the
outside, on the inside it will be pulsing with thousands of terabytes of
data. The Sabey Corporation,
a developer and operator of data centers based in Seattle, acquired the
condominium that makes up a majority of the building for $120 million
last year with a minority partner, the developer Youngwoo & Associates. (Verizon will continue to occupy and own three of the 32 floors.)
The seller was M&T Bank, which took control of the property from
Taconic Investment Partners after that developer’s $350 million plans to convert the building into an office tower fell through.
The condominium, at 375 Pearl Street, will be one of the city’s largest
data centers when it opens, at roughly one million square feet, with
access to up to 40 megawatts of electricity, enough to power 2,000
average-size homes.
“We like to think about our data centers as just one large computer, and
this computer is going to help drive the New York economy into the 21st
century,” said David A. Sabey, the company’s president.
There are a handful of other data centers across the city, notably
several that lease space at 111 Eighth Avenue, the huge Chelsea office
building that Google acquired last year.
In the wake of that deal, there is growing concern that as these data
centers’ leases expire Google will take over the space for its own use,
said Wes Rudes, a senior vice president at the New York branch of the
brokerage company Cresa.
“There have been more than five million square feet of data center deals
done in the tristate area in the last three years,” Mr. Rudes said, “so
there is a ton of demand and a lot of companies are in the market.”
Google declined to comment.
Another large data center is at 60 Hudson Street, the landmark Western Union building in TriBeCa. DataGryd,
the company that runs the building’s data center, is offering four
60,000-square-foot floors with four megawatts of power available per
floor, “although more power is available if needed,” said Peter Feldman,
the company’s chief executive. DataGryd is also building a cogeneration
plant, which will make more power available at the site.
A third data center site is at 32 Avenue of the Americas, the historic
former AT&T building. Also a landmark, it has 20,000 square feet of
space and 15 megawatts of power currently available, according to John
J. Gilbert III, the chief operating officer for Rudin Management, the landlord.
Michael G. Morris, a senior managing director at Newmark Knight Frank and part of its data center consulting group, said there were few opportunities in Manhattan
to build modern data centers. Of the Verizon building, Mr. Morris, who
is representing the building, said: “The introduction of a purpose-built
data center with new systems will be well met in a marketplace with
limited supply and antiquated product.”
Mr. Sabey said the company spent two years searching for a facility in
the Northeast before it settled on 375 Pearl Street. Because the company
was not proposing to turn it into an office tower, he said, “we could
mine an intrinsic value that other users couldn’t, and as a result we
got a wonderful property at a very low cost.”
The building works perfectly as a data center, Mr. Sabey said, because
its floor plates can withstand 200 to 400 pounds per square foot,
compared with just 100 pounds per square foot for most office towers. It
also has access to a large amount of power, and its location in a
high-density area is ideal.
Proximity to data centers is important for several industries, including
Wall Street traders, where speed is critical and an additional
nanosecond for data to travel over a longer distance would put the
traders at a disadvantage. In addition, moving large amounts of data
requires extensive bandwidth, and this can be expensive. “If you have
everything in one building, moving data from a sequencer to a disk drive
is much cheaper if you aren’t running over a leased carrier line. As
distance increases, you must take into account the price of maintaining
the bandwidth you need,” Mr. Sabey said.
Even the building’s much-maligned facade, with its heavy vertical lines
and small windows, is an advantage. “It is ironic, because we like the
look of the building,” Mr. Sabey said. “It has a good cover that won’t
let in a lot of heat gain, and it is very stout — it is really very
data-centeresque.”
While Sabey plans to leave the facade alone, it is gutting the inside of
the building. “This is definitely the tallest data center, and maybe
the largest high-rise data center in the world,” Mr. Sabey said.
The building should be ready for occupancy by the fall. In some cases,
the company will lease directly to tenants, like large financial
institutions or hospitals, and also possibly to outside data center
companies that can run their own data centers inside the building. While
no occupants have signed a lease, “we are negotiating business terms
with a number of prospective tenants,” Mr. Morris said.
As for the rent, data center occupants sign agreements much like
traditional office leases, but the pricing is often based on kilowatts
used per month rather than square feet occupied. While he declined to
give an asking rent, Mr. Morris said several factors went into pricing:
the amount of power that is available, the reliability of the power
based on battery backups and generators, and services offered like
maintaining an ambient temperature to keep the computers working at
optimal speeds. Average rents in Manhattan range from $275 to $350 per
kilowatt per month, he said. In addition, tenants pay for their
electricity consumption.
Industries like financial services, law firms and online commerce
companies now demand the use of data centers. The Sabey Corporation
hopes to tap into the city’s growing life sciences industry, which Mr.
Sabey said “could eventually make up as much as 20 percent of our
business in New York.”
The city has begun several efforts to spur the technology and life
sciences industries, including the recent announcement of a technology
campus at Roosevelt Island.
The data center at 375 Pearl Street could
help provide the infrastructure to support the city’s initiatives, said
Kathryn S. Wylde, the president and chief executive of the Partnership for New York City, a network of business leaders.
“We are top in the world when it comes to scientific research,” she
said, “but what we haven’t done is commercialize this research, and this
data center will help us do this.”
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