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Demand growing for data centers despite failed deal

Updated: August 28, 2013 6:14AM

Experts say a failed effort to convert a former Chicago Sun-Times printing plant into a center for housing Web-traffic hardware won’t hurt the city’s efforts to build more of the so-called data centers.

Investors who included executives at JDI Realty and Madison Dearborn Partners had reportedly paid $20 million for the 508,000-square-foot plant at 2800 S. Ashland Ave., which the Sun-Times shuttered two years ago. The investors planned a 10-year commitment of nearly $1 billion, including adding two new data centers at the site, according to an ordinance that the City Council passed on June 26. The ordinance would have let the property owners sell the site without repaying $7.5 million in city tax-increment financing that helped build it 14 years ago.

Yet, experts say, even if the printing plant never becomes a data center, demand for data centers will keep growing.

That’s because consumers’ and businesses’ demands for bandwidth-hungry video, big data, cloud computing and personalized media require enormous computer storage growth.

That’s where data centers come in. Data centers are cavernous, temperature-controlled, fortress-secure buildings that house the web servers, network services and storage equipment that companies need to transmit, store and back up data. They house the workhorses that undergird companies’ e-commerce, information technology services, financial and social transactions and other everyday functions.

“Lots of developers and lots of Wall Street money are chasing the data-center business in Chicago and on a national basis,” said Christopher Jensen, managing principal at Digital Capital Partners, which runs a data center at 725 S. Wells St. in Chicago. “There is no doubt that data-center demands will continue to increase in the future.”

Jensen speculated that the developers of the Sun-Times’ former press may have failed to attract an anchor tenant, which, if true, would have hurt their ability to attract financing.

No one from the investor groups returned phone calls on Friday seeking information about the failed project.

John Tolva, Chicago’s chief technology officer, said the site “is just as opportune as it has ever been” for a data center, primarily because the building is close to power substations and high-speed fiber lines, and has heavy-duty floors that can bear the weight of computer servers, among other attributes.

Mayor Rahm Emanuel aims to attract data centers throughout the city with an initiative, called Data Center Express, that streamlines the process of setting up a data center, from getting permits to rehabbing or building new buildings.

The city already has about 30 data centers, including the world’s largest at the old R.R. Donnelley printing press at 350 E. Cermak, covering 1.1 million square feet.

The interest is so great that Chicago’s South Side is now attracting data centers, including at the former Schulze Baking Co. plant at 40 E. Garfield Blvd. and at a Sears store at 1334 E. 79th St. set to close on Sunday.

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