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.”

Foulger-Pratt has been building apartments and commercial projects for more than half a century, and now the Maryland-based developer is expanding into a new business line: build-to-rent. 

Courtesy of Foulger-Pratt

An aerial rendering of Foulger-Pratt’s build-to-rent community in Brandywine, Maryland.

The firm has been quietly working on establishing a BTR pipeline in the Carolinas and the D.C. suburbs for around two years, and its executives leading the effort told Bisnow Friday that Fougler-Pratt is officially launching the new platform as its first series of projects have closed and are approaching their lease-up periods.  

The five projects total 700 units of for-rent townhouses and single-family homes, and their combined project cost is $250M, Foulger-Pratt Managing Director Joe Clauser said. The projects are all scheduled to begin leasing within the next nine months. 

The developer is partnering with a pair of institutional investors, which Clauser declined to name. He said the firm aims to add around 1,000 more units to its portfolio over the next two years and continue to grow from there. 

“Our ultimate long-term goal here is to have a multibillion-dollar platform in this space,” Clauser said. 

The firm is expanding into the BTR space in part because of how challenging it has become to develop multifamily buildings, with rising interest rates and construction costs making deals difficult to pencil, Foulger-Pratt Vice President Nick Beeson said. 

“This really is a matter of shifting demographics,” Beeson said. “We are very bullish about the demand for this housing solution based on family-forming millennials as well as downsizing boomers, so there’s a lot of demographic tailwinds in this space, but also from a return-on-cost basis, these deals tend to pencil better than a lot of multifamily development right now.”

The move also represents Foulger-Pratt’s expansion into the Carolina markets. The Potomac, Maryland-based developer spent decades building around the D.C. area and has previously expanded to California, Utah and Texas. Its portfolio totals 23 multifamily properties, 15 office properties and 12 retail properties, according to its website. 

Founded in 1963 by Sid Foulger as Foulger & Co., the company today is led by Chairman Bryant Foulger and CEO Cameron Pratt. 

Along with the expansion, Beeson, a North Carolina native, moved from D.C. to Raleigh to lead the execution of the regional expansion while Clauser leads its capital partnerships and strategic direction from Potomac. 

“This is the splash, and it’s a sizable splash,” Beeson said of the expansion. “We’ve been actively pursuing opportunities in North Carolina for two years now. We were disciplined and judicious in what we elected to move forward on down here.”

The firm’s initial wave of BTR projects consists of four under-construction projects it is acquiring from homebuilders as they are completed, three in Charlotte and one in Raleigh, plus one in the D.C. suburb of Brandywine, Maryland, that it is building from the ground up. 

The Brandywine project will be 170 townhouses next to the Brandywine Crossing shopping center and a medical office building that Foulger-Pratt developed. 

The project is a rare example in the D.C. area of a build-to-rent community being constructed from the ground up, a strategy that has boomed in the Sun Belt and other regions. Nationwide BTR development hit an all-time high in 2021 with 6,740 new homes completed, according to RentCafe.

The D.C. metro area didn’t crack the top 20 largest markets for single-family rental homes in the RentCafe report, but it has begun to see some BTR projects moving forward. Another local developer, American Real Estate Partners, expanded into the BTR sector in August with the acquisition of a 200-unit townhouse community that is under construction in McLean, Virginia. 

Clauser said the D.C. area’s high housing prices make it difficult for rental product to compete with new for-sale homes, limiting the growth of the BTR market. 

“It was one of rare sites we’d found in the DMV area where we were able to get the land where we could get zoning for townhomes and deliver a product at a cost basis that worked for a rental product,” he said. 

Courtesy of Foulger-Pratt

One of Foulger-Pratt’s build-to-rent communities in North Carolina

In North Carolina, a market that has seen more BTR development, Foulger-Pratt has four projects: a 172-unit community in the Raleigh suburb of Wendell, a 144-unit project in the Charlotte suburb of Gastonia, a 128-unit community next to the Oak Hills Parkland Reserve in Northwest Charlotte and an 86-unit project near Gaston Country Club in the Charlotte suburbs. 

Those four projects were all initiated by for-sale homebuilders, and Foulger-Pratt reached deals to acquire them as they are completed and operate them as rental properties. The deals allowed Foulger-Pratt to buy homes at a discount to what they’d go for individually on the open market, and it helped the homebuilders reduce their risk in a for-sale market that has faced uncertainty due to rising interest rates over the last year. 

“In late 2022, we wanted to capitalize on the then-softening of the homebuilder market, the home sales market, and we pursued strategic partnerships with homebuilders who had projects underway in some of our target markets, and we found mutually beneficial solutions for them to pivot into the rental execution transaction with us,” Beeson said. 

As it works to grow its pipeline, Foulger-Pratt is looking to do more deals with homebuilders, and it is searching in a range of markets. Clauser said it continues to explore the D.C. area and North Carolina, and it is branching out to other parts of the Southeast, plus the Texas and Salt Lake City markets where it has built multifamily projects. 

“We want this to be a national platform,” Clauser said. “While we have certain target markets where we’ve been more focused, we view this as something that we develop throughout the Southeast where these tend to pencil best in the ‘smile states,’ and that’s where capital momentum is, as well, in higher-growth markets.”

The single-family rental market has faced some criticism as Wall Street giants have scooped up massive portfolios of homes in existing neighborhoods, but Beeson said there is a meaningful difference between that strategy and the BTR strategy of building new communities from the ground up. 

“This is not an asset manager coming in and buying up your grandmother’s neighborhood,” Beeson said. “This is new housing stock. This is bringing more homes to communities that need more residential supply.”