Data center provider razes 55 homes to make room for Illinois campus

“Beyond getting an outstanding data center site, it was nice to see that the landowners did very well as evidenced by the support we received in our development process (who showed up at our public meetings voicing their support for this project). Craig Johnson, the mayor of Elk Grove Village, and the village staff have been hugely supportive throughout the development process,” the spokesperson added.

Elk Grove is the largest data center submarket in the Chicago area, and it offers several latency-sensitive connection points that developers want to be around, according to Andy Cvengros, managing director, data center markets, with Jones Lang LaSalle, which specializes in building data centers.

Regarding the 55-home purchase, it’s not the first time a data center company paid for and demolished homes, Cvengros said. Data center providers Prologis and CyrusOne have done the same thing.

Real estate generally follows “its highest and best use,” he said. In this case, when the land was used for residences, it was worth $20 per square foot. But if converted to data center use, it’s worth between $45 and $50 per square foot, according to Cvengros.

So, Stream is very likely to make its money back, even with the added expense of buying all those homes. “It is all a function of what can be developed there. Every data center operator is trying to build at scale by bringing massive power with multiple buildings. If they pull off what they intend to, they should very profitable, I would imagine,” Cvengros said.

Alvin Nguyen, senior analyst with Forrester Research, believes this is something to expect more of in the future. “Data centers need to be located near the users – residential, commercial, and industrial – so competition for this type of space makes sense. If their prospective clients are based nearby, or more importantly, their prospective clients’ clients are nearby, then this is an ideal opportunity,” Nguyen said.