Data center developer T5 Data Centers is expanding its footprint in Georgia and Chicago amid the firm’s growing focus on hyperscale megacampuses. 

Atlanta-based T5 announced plans last week for a 1.2 gigawatt data center campus in Georgia, its fourth in the state. The firm also acquired 32 acres near Chicago, adding to an assemblage on which it is building a similarly scaled megacampus.

The two projects represent the first stages of a multibillion-dollar joint venture with Canadian real estate firm QuadReal Property Group that the firm hopes will see them build gigawatt-scale campuses in markets across the U.S.

“Things are not slowing down at all,” Robbie Sovie, the firm’s executive vice president of development and construction, said to Bisnow when asked about the data center pipeline. 

In Georgia, T5’s latest proposed campus may eventually have as many as 20 data centers on-site and come with a price tag north of $16B, CEO Pete Marin told The Atlanta Journal-Constitution last week. 

While the firm hasn’t disclosed the project’s location, a document filed by T5 last week with the Georgia Department of Community Affairs shows plans for a project called “T5ATL IV” in the Fulton County city of Fairburn southwest of Atlanta. According to the filing, T5 plans to initially build three buildings totaling 1.3M SF at the Fairburn site.  

A campus with more than a gigawatt of capacity would be T5’s largest development in Georgia by far, and it continues the firm’s expansion in its home state. T5 is building a 300-megawatt campus in Palmetto on 91 acres the firm acquired last summer along with a separate 300-megawatt campus in Lithia Springs. The company also operates a smaller facility in Alpharetta. 

In Chicago, the 32 acres T5 acquired in the North Shore community of Grayslake adds to 193 acres the firm already acquired in the town, The Real Deal reported. T5 has now spent nearly $60M in the past year acquiring land there for its proposed hyperscale campus. As in Georgia, the project has been pitched as 1.2 gigawatts of eventual capacity spread across up to 20 separate buildings.

The first phase of the Chicago campus may be delivered as soon as 2027, according to T5. 

The campus will be T5’s fourth, and largest, project in the Chicago area, a market the firm has steadily expanded in over the past two years. T5 is in the process of building a 36-megawatt facility in Northlake that was topped out last week. In March, T5 acquired a site in Elk Grove Village where the company plans to build another 36-megawatt data center, adding to the facility it already operates in the Chicago suburb. 

The planned gigawatt campuses in Chicago and Atlanta are the first of what T5 says will eventually be five similar projects launched in different U.S. markets through a joint venture with QuadReal. 

T5 and QuadReal have a long-running partnership and have previously developed data centers in Silicon Valley, Hillsboro, Chicago, Atlanta and Charlotte. The firms announced the shift toward gigawatt campuses in February, with T5’s leadership describing a Scaled Campus strategy in which massive campuses will be filled incrementally by 60-megawatt facilities. The JV plans to raise $8B specifically to support the five-campus effort. 

This push to build campuses at such a massive scale continues a period of rapid expansion for T5, which has data centers at 13 sites across the U.S. The company primarily serves hyperscale and large-scale enterprise tenants and has separate business lines focused on data center construction and operation for third parties. 

While the firm’s portfolio contains a range of data center assets ranging from multitenant facilities to campuses for cloud providers, the planned gigawatt campuses are the heart of T5’s expansion strategy, said David Mettler, T5’s executive vice president of sales and marketing.

The company may sporadically pursue smaller-scale development like the recently announced data center in Chicago’s Elk Grove Village, but such projects will be limited. 

“We’ll have tactical execution on special sites that we find that are available that we think will help our customers,” Mettler said. “But our bigger strategy is around the scale campuses.”

T5 is far from the only firm proposing campuses north of a gigawatt in data center hotbeds like Atlanta and Chicago amid power constraints that have pushed wait times for electricity from utilities to as long as a decade. But navigating these power constraints represents a competitive advantage for T5, Sovie said.

Sovie pointed to T5’s existing relationships with utilities and track record of successfully executing campus-scale projects in primary markets, particularly Atlanta and Chicago. When utilities are deciding which data center projects to prioritize, it’s companies with track records like T5 that are jumping toward the top of the list.

“Those are the people that the power companies are really listening to,” he said. “Some of the new entrants in the market, they’re just throwing capital and trying to structure deals … we’re hearing direct from the power companies that they’re not getting a lot of attention.”

Marcus & Millichap (NYSE: MMI) has published its Midyear 2024 Houston Industrial Market Report.

Highlights include:

• Houston’s industrial inventory expanded by 20% since 2019, adding over 110 million square feet, which increased the vacancy rate to 7.5% by mid-2024.
• A shift in the supply pipeline is helping to stabilize the market, with nearly 75% of the new space already pre-leased as of June 2024.
• The second half of 2024 will see a reduced slate of new deliveries, with about 2.8 million square feet less than the first half, signaling a slowdown in construction.
• Houston’s average asking rent is projected to grow for the fifth consecutive year, reaching $9.07 per square foot by year-end, despite trailing rates in Austin.

“While vacancy pressures have been a challenge, the industrial market is showing promising signs of recovery, particularly in areas like the Southeast and Southwest corridors,” added Marcus & Millichap’s Ford Noe.

Fairfield Residential, along with Griffin Capital, started building 2300 North Tryon, a 307-unit, five-story apartment community north of uptown Charlotte.

The Charlotte Business Journal reports the developers filed a building permit valued at $4.12 million with Mecklenburg County. Fairfield acquired the 3.6-acre parcel at 2220 N. Tryon St. last year for $9.15 million. The first units will be delivered in late 2025, with a full delivery expected sometime in 2026.

Dwell Design Studio is the project architect, Bolton & Menk is the civil engineer, and Fairfield is the general contractor. The mid-rise community will offer a mix of studio through two-bedroom units and feature a variety of tenant amenities, including a pool, fitness center, co-working lounge with a coffee bar and private offices, rooftop lounge, community dog park and pet spa, and outdoor kitchen space.

Fairfield has developed tens of thousands of apartment units across more than 30 markets, including three communities in Durham and one in Charleston, South Carolina.

Trammell Crow Company (TCC) is expanding into Charlotte and is hiring Tom Burr as Senior Vice President. In this role, Tom will be responsible for sourcing and executing multifamily development opportunities in the Charlotte market for TCC’s residential subsidiary, High Street Residential (HSR). Tom joins TCC from Flournoy Development Group, where he was the lead developer on multifamily projects throughout the Carolinas and Virginia, totaling over $800 million in value and 2,700 units.   

Josh Dix, HSR Principal added, “Having Tom based in our new Charlotte office will allow our team to cover even more ground and identify the best development opportunities across two of the fastest-growing multifamily markets in the country.”
 
Between 1974 and 2013, TCC developed, acquired or invested in nearly seven million square feet of space across 67 projects in North Carolina. This activity includes some of Charlotte’s most iconic buildings, such as Hearst Tower and Truist Center.

Net lease cap rates have risen again in the second quarter of 2024, with average caps increasing by 12 basis points quarter-over-quarter to 6.27%, B+E reported. Also up are the average times on the sale market, which increased by 0.8 months during Q2.

B+E’s Q2 cap rate report found that retail cap rates have risen by an average of 12 bps, with some sectors such as casual dining and dollar stores increasing by 21bps from Q1. However, cap rates for quality tenants such as McDonald’s remain relatively stable. Industrial cap rates increased by an average of 15 bps, with FedEx properties rising 39 bps to an average of 6.87%.

“The rise of the 10-year U.S. Treasury continues to put upward pressure on cap rates as investors face higher borrowing costs,” according to the report. “The [Federal Reserve] continues to cite inflation, better-than-expected economic growth and a tight labor market as factors leaving rates unchanged.”