Data centers booming with $2.5 billion project at former United headquarters

Construction has begun on the site of the former United Airlines headquarters in Mount Prospect, with the recent demolition of the property paving the way for the creation of a $2.5 billion data center campus whose launch is scheduled for 2024.

Officials of CloudHQ, a Washington, D.C.-based global data center provider specializing in the design, development and operation of “hyperscale” data center facilities, said the 1.5 million campus of square feet is expected to create 75 to 100 jobs for each of the three planned buildings, including operations, maintenance and security positions.

The site, which is bordered by Dempster Street and Algonquin and Linneman roads, is expected to generate up to 3,000 construction jobs during construction of the three buildings.

Hyperscale data centers typically house hundreds of thousands of computer servers in each building to meet the data storage needs of the world’s largest enterprises, officials said in a statement.

“Chicago has long been a digital infrastructure hub for our customers, who already have an existing presence in the market,” said CloudHQ spokesperson Brett Burnette.

Burnette declined to name CloudHQ customers who should store their servers on the site, citing “strict confidentiality agreements.” But he said CloudHQ customers represent “some of the largest ISPs in the world.”

In addition to the company’s global headquarters in Washington, DC, and European headquarters in London, CloudHQ has offices in Frankfurt, Germany, and São Paulo, Brazil, and data center campuses in Northern Virginia.

The development is the 8th new data center project to launch in the past year in ComEd’s service territory, which covers northern Illinois, ComEd officials said in a statement. ComEd will build a new substation on site to support CloudHQ operations.

“Companies like CloudHQ continue to look to Northern Illinois and our service territory for the unparalleled access to clean, affordable, and reliable energy that is essential to meet the demands of today’s economy,” said said Gil C. Quinones, CEO of ComEd, in a statement. statement.

The first phase of the three-building project is expected to be completed in 2024, with two additional buildings to be completed in the next three to five years depending on demand, officials said.

Bill Cooney, director of community development for Mount Prospect, said the village annexed the 50-acre site in unincorporated Cook County in 2017, about a decade after United Airlines began vacating the property and move its employees to Chicago, eventually settling in Willis Tower.

“The village annexed the property so we could have more control over its future,” Cooney said.

Cooney said CloudHQ would receive a 6b tax incentive from Cook County for the project, which would reduce the property’s assessment level from 25% to 10% for the first 10 years, 15% for year 11, and 20% in year 12.

After year 12, the assessment level reverts to 25% for beneficial ownership, Cooney said.

While local tax districts will benefit from the increased property value, the Class 6b incentive represents a tax savings of approximately $2.5 million per year for the business once fully assessed. assuming an estimated worth of $100 million, Cooney said.

The company will generate more than $1 million a year for the village in electric utility taxes and will donate $2 million to the Mount Prospect Park District for local park improvements, it said. -he declares.

The Class 6b program is designed to encourage industrial development by providing a real estate tax incentive for the development of new industrial facilities, the rehabilitation of existing industrial structures and the industrial reuse of derelict buildings, according to the County Assessor’s Office of Cook.

According to ComEd, 2019 was a “turning point” for the data center industry in Illinois, following the passage of new state legislation providing a tax incentive to encourage tech giants and other companies to locate their data storage facilities in the state.

As part of a $45 billion capital construction plan, the incentive exempts eligible data centers from state and local sales tax on equipment inside the facilities, such as cooling and heating, servers and storage racks.

Since adopting the Data Center Incentive Program, ComEd has seen 15 new data center projects, including six projects bringing in more than $2 billion in local investment in 2021, the company said.

In ComEd’s northern Illinois service territory alone, there are now more than 70 operational data centers, with six under construction and 13 more in the design or planning stages, the company said.

Real estate firm Cushman & Wakefield ranked Chicago fourth, along with Atlanta, in its 2022 list of best cities for data centers, behind Silicon Valley, Singapore and the top-ranked location, Northern Virginia. The report cites Chicago’s “significant incentives, low cost of land, many ongoing developments, and lower electricity costs than most major data center markets.”

Burnette with CloudHQ said the data center campus will require a few large trucks and, with only a few hundred employees at most, won’t increase traffic in the neighborhood.

“We will try to blend in and go about our business, without disrupting the community,” Burnette said.

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Ramon J. Espinoza