Lincoln Property Company’s Return to Chandler Data Center Market
In a significant real estate maneuver, Lincoln Property Company is poised to reacquire and expand a data center facility at 2500 W. Frye Road in Chandler, Arizona, marking a strategic return to a property the company previously owned and sold in 2019. This move underscores the growing value of data center assets in the Phoenix metropolitan area, which has become a hotspot for digital infrastructure investment due to its favorable business climate and connectivity.
Historical Context and Property Evolution
The property in question has undergone multiple transformations since its initial construction as a manufacturing building in 1988. Converted to a data center in 2002, it became part of a campus acquired by Bank of America in 2008. A decade later, the bank decided to divest the data center portion, leading to Lincoln Rackhouse (the former name of Lincoln’s data center division) and Principal Real Estate Investors purchasing it as part of a three-building portfolio in 2018. However, they sold it to CBRE Global Investors in 2019 for $72.7 million. Now, Lincoln’s potential reacquisition highlights the asset’s enduring appeal and the company’s confidence in the data center sector’s growth, especially as Lincoln Property Company nears acquisition of Chandler data center, reinforcing its commitment to this strategic market.
Expansion Plans and Regulatory Approvals
Lincoln Property Company is collaborating with Chandler city officials to update a development agreement that would facilitate the purchase and allow for a substantial expansion. The proposal includes adding a three-story, 243,000 sq ft (22,575 sqm) building to the existing 150,000 sq ft (13,935 sqm) data center on a 14.5-acre site. This expansion, which follows CBRE Investment Management’s approved plans from last year, would also involve upgrading the cooling systems in the current structure to enhance efficiency and capacity. Chandler’s approval of the amended agreement is crucial for the deal to proceed, reflecting the city’s role in fostering market trends that support infrastructure growth and economic stability.
Tenant History and Market Dynamics
The site’s tenant history adds layers to its story. In 2018, INAP (now rebranded as HorizonIQ) leased the facility from Lincoln Rackhouse but filed for bankruptcy in 2023. HorizonIQ has since shifted its focus to cloud and hosting services, operating from an Iron Mountain facility in Phoenix, indicating a broader industry move toward flexible, scalable solutions. This transition aligns with recent technology disruptions that emphasize the need for resilient data infrastructure. Lincoln’s reentry into this asset class suggests a bullish outlook on data demand, driven by cloud computing and digital transformation.
Broader Implications for the Data Center Industry
This acquisition and expansion are part of a larger trend in the data center market, where firms are aggressively investing in prime locations to capitalize on the surge in data consumption. The Phoenix area, in particular, has attracted attention due to its low disaster risk and robust energy infrastructure. Lincoln’s move could signal increased competition and innovation in the sector, as companies seek to meet evolving client needs. For instance, related innovations in outage prevention and reliability are becoming critical differentiators. Additionally, such investments often reflect confidence in economic conditions, similar to how industry developments like activist investor engagements can influence corporate strategies and asset valuations.
Conclusion: A Strategic Bet on Digital Growth
Lincoln Property Company’s potential reacquisition and expansion of the Chandler data center underscore a strategic bet on the long-term growth of digital infrastructure. By upgrading an existing asset and navigating regulatory processes, the company positions itself to benefit from the escalating demand for data storage and processing. This deal not only highlights the resilience of the data center market but also serves as a bellwether for future market trends in real estate investment, where technology-driven properties are increasingly prized. As the industry evolves, such moves will likely shape the landscape of data center ownership and operation, ensuring that providers can support the next wave of digital innovation.
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