CBRE IM to Expand Phoenix Data Center

Local approval will allow the owner to more than double its existing facility.

Elliot Gateway, Mesa, Ariz.
CBRE Investment Management also owns Elliot Gateway, an industrial campus in Mesa, Ariz. that was developed in partnership with Trammell Crow Co. Image courtesy of Trammell Crow Co.

CBRE Investment Management has received local governmental rezoning and approval for the expansion of its data center in Chandler, Ariz., the Phoenix Business Journal reported.

Under the plan approved by the Chandler city council, the facility located at 2500 W. Frye Road in the East Valley of metro Phoenix will be expanded by 243,000 square feet. Its current size is roughly 150,000 square feet.

CBRE IM could not be reached for further information.

Interestingly, the building currently on the 16.4-acre site came online in 1988 and was used as an office building by Bank of America; its conversion into a data center occurred in 2008. CBRE Global Investors acquired it in 2019 for $72.8 million, according to CommercialEdge information.

READ ALSO: Prologis, Blackstone Double Down on Data Centers, but Hurdles Remain

The three-story expansion building will rise on an underused parking lot. Gensler designed the project, while Kimley-Horn & Associates Inc. will handle landscaping.

As part of the project, the nearby Salt River Project substation currently powering the data center will also be expanded. In addition, the owner will replace the entire facility’s old water-cooling system with an electric air-cooling method.

The PBJ report noted that local residents’ concerns about noise at the data center were a factor in delaying approval of the expansion.

Kristen Vosmaer, managing director on JLL’s Data Center Work Dynamics team, told Commercial Property Executive that noise is indeed a growing issue for data centers.

“Data centers do face scrutiny over noise, a factor increased in developments near residential areas, as well as around natural habitat,” she said. “Generators and air handlers both can emit noise above permitted decibel levels. We increasingly see permit applications facing the same level of scrutiny on noise as they receive over water, habitat, and right-to-light issues. Proper noise abatement strategies require zoning knowledge, understanding of one’s design and its implications, and effective mitigation strategies to counter the emittance in both greenfield and retrofit developments.”

Data in the desert

In May, QTS Realty Trust announced plans to develop a 3 million-square-foot data center campus in Glendale, Ariz. The 375-acre QTS PHX 3 project could include up to 16 buildings of about 180,000 square feet each.

QTS acquired the property, north of Camelback Road and west of Loop 303 along Cotton Lane, for $255.3 million in July 2022 from First Industrial Realty Trust.

Major considerations for data center development this year include innovative, energy-efficient approaches to powering and cooling these projects, according to a CBRE 2024 market outlook. In fact, some construction timelines have been delayed by as much as 24 to 72 months because of difficulties in securing adequate power supplies.

Demand for new data centers is expected to attract greater institutional investment, while the forecast for development in primary U.S. markets is about 3,000 MW.

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