Serverfarm Enters Los Angeles With $71M Acquisition

Serverfarm’s Los Angeles Data Center (LAX1). Photo courtesy of Miller + Miller Architectural Photography.

Serverfarm, together with its partner NantWorks, has entered the L.A. data center market with the acquisition of a 117,500-square-foot data center in El Segundo, Calif. Previously owned by T5 Data Centers, the property traded for $71 million, according to CommercialEdge. A team of Transwestern brokers represented Serverfarm in the transaction.

Renamed LAX1, the facility provides 12 MW of critical IT load and features an on-site power substation. The data center is capable of high-density deployments of up to 200 W per square foot of raised floor space. The carrier-neutral facility meets all HIPAA, HITECH and PCI compliance requirements. Serverfarm will apply its Data Center Management as a Service solution to LAX1, expecting to significantly lower carbon emissions.

LAX1 is located at 444 N. Nash St. and is closely situated to major aerospace and defense contractors, R&D companies, as well as Los Angeles International Airport. Additionally, Serverfarm’s headquarters is a few blocks away from the facility.

Edge-play in underserved market

In an interview for JSA TV published on YouTube, Serverfarm Vice President of Real Estate Mario Calderone explained, in detail, the company’s reasons for picking this location. The newly acquired data center was underutilized, according to Calderone, and Severfarm seeks to deploy the remaining capacity for future customers.

Furthermore, Calderone explained that the overall L.A. data center market is underserved due to its prohibitive costs limiting supply. According to the same interview, the acquisition was an “edge play” by Serverfarm, capitalizing on the market’s increasing demand.

According to a Cushman & Wakefield report, Los Angeles had 2 MW of absorption in the second half of 2020, with 11 MW under construction at the time.

Space for new development is limited in the market, with vacancies reaching 7 percent in the second half of 2020, the same report shows. In December last year, CoreSite completed an 18-megawatt deployment downtown. Other major players in the Los Angeles data center market include Equinix, Amazon and Google.