Data Center Firm Outbids Housing Developers

- The data center firm is Dallas-based Stream Data Centers, and the project is located in Elk Grove Village, a major data center submarket in the Chicago area. The planned development on the 34-acre site will result in a 2 million-square-foot campus, one of the largest in the state. - This acquisition is part of a larger trend of converting land to more profitable uses; the value of this specific parcel is estimated to have increased from $20 per square foot as residential land to between $45 and $50 per square foot for data center development. This is not an isolated event, as data center developers Prologis and CyrusOne have also recently demolished homes for new projects. - The Chicago data center market is experiencing significant growth, with a total capacity of approximately 1 gigawatt and an availability rate of just 1.6%. Projections show the market is expected to grow at a compound annual growth rate of 6.73%, reaching a capacity of 2.81 gigawatts by 2031. - This boom is fueled by a 2019 Illinois law providing sales tax exemptions for data center projects that invest a minimum of $250 million and create at least 20 jobs. In its first three years, this incentive attracted 15 data center projects with over $4.6 billion in investment. - Other significant data center projects in Chicago's suburbs include Compass Datacenters' $10 billion, five-building campus on the 200-acre former Sears headquarters in Hoffman Estates. Another major development is CloudHQ's $2.5 billion, 1.5 million-square-foot campus on the former United Airlines headquarters site in Mount Prospect. - The high energy consumption of these facilities is projected to impact utility costs for all area residents. According to the Citizens Utility Board, the rapid growth of data centers could lead to an increase of as much as $70 in annual electricity bills for Chicago-area consumers within the next three years.