A Japanese developer of data centers has paid more than $27 million for two office buildings west of Chicago’s O’Hare International Airport, which it is expected to demolish as part of an ongoing series of cloud data storage facilities it is creating within the suburban Hamilton Lakes corporate park.
NTT Global Data Centers in November paid $27.5 million for the buildings at 1200 and 1250 N. Arlington Heights Road in Itasca, Illinois, according to DuPage County property records.
It’s the latest example of developers zeroing in on vacant or lightly used offices to convert them to other uses amid historically low usage of office space throughout the country.
Many of those have been conversions to warehouses, but data center companies also have been getting into the act, as recently seen farther northwest in Chicago’s suburbs. In Hoffman Estates, Illinois, Compass Datacenters in September paid $194 million for the sprawling former Sears headquarters, which the Dallas-based developer is expected to demolish to make way for newly constructed, high-tech data storage space.
The deal by NTT Global Data Centers creates room for future phases of data center construction within Hamilton Lakes, a sprawling campus with office buildings, hotels and other buildings developed in recent decades by local firm Hamilton Partners.
NTT Global Data Centers is one of the nation's largest developers in the high-demand property sector. It is part of Tokyo-based telecom giant NTT. The firm declined to comment to CoStar News about its plans for the newest site in Itasca, which is more than 12 acres.
But the firm already has one data center on a nearby site that it bought from Hamilton Partners, and it’s in the process of adding a second one there. That site is part of more than $64 million that NTT has now paid to Hamilton Partners for more than 46 acres in a series of deals between 2017 and late this year, according to county records and CoStar data.
“We have a good relationship with them and it’s working out well for the park,” Patrick McKillen, a partner at the local development firm, told CoStar News.
“From our standpoint, we’re probably not going to develop another office building for a while,” he said. “It’s a good fit.”
Unlike other uses, such as distribution centers, data centers create little traffic or noise, McKillen said. The latest sale, unlike previous land deals with NTT, will remove vacant office space from the complex.
The five-story building at 1250 N. Arlington Heights Road is vacant and the four-story structure at 1200 N. Arlington Heights Road is less than 40% leased, McKillen said.
“We have the opportunity to reposition some of those tenants in other buildings at Hamilton Lakes” when NTT eventually demolishes the buildings for later phases of its data center campus, McKillen said.
Data centers are essentially warehouses filled with servers and other gear that can be used to help power Americans’ ever-growing use of streaming services, online shopping and storage of personal data such as photos. Major users of data storage include Amazon, Google, Netflix and Facebook parent Meta.
Chicago is one of the largest data center markets in the country. The largest is in Northern Virginia.
Itasca and neighboring suburbs, particularly Elk Grove Village, have emerged as a hot spot for data storage. The Chicago area is favored by data center owners because of access to power, fiber optic lines, state and local tax breaks and the area’s relatively low risk of natural disasters.
Ongoing developments near O’Hare include a $1 billion project launched about a year ago by Prime Data Centers in Elk Grove Village.
In a deal that demonstrated the high value of such properties, Digital Realty earlier this year recapitalized two data centers in Elk Grove Village that valued the real estate at $900 million.