Logistics Meets Data: Skybox Teams With Prologis on Data Center Projects

Skybox Datacenters will partner with logistics real estate specialist Prologis Inc. to develop data centers in Chicago and other major U.S. markets. The first project will be a 30-megawatt, 189,000 square foot project in Elk Grove Village the leading data center hub in the Suburban Chicago market.

The announcement highlights the growing intersection of logistics and digital infrastructure, which are both more important than ever in supporting global business through the COVID-19 pandemic.

Logistics specialists like Prologis have extensive real estate holdings in proximity to population centers, which are also key data center destinations as cloud platforms and video services seek to bring content closer to eyeballs.

“Skybox is thrilled to work with a powerhouse like Prologis,” says Rob Morris, CEO of Skybox Datacenters. “Our partnership will bring together two very important roles: Skybox will provide leading data center development and leasing expertise while Prologis will bring substantial holdings.

“We are excited to see this partnership elevate data center sector standards with best-in-class real estate and data center collaboration in a booming market like Elk Grove,” said Morris.

Prologis is a global leader in logistics real estate, with 984 million square feet of advanced facilities and development projects in 19 countries, supporting 5,500 customers in business-to-business commerce and retail/online fulfillment. With access to hundreds of assets in Elk Grove Village alone, Skybox and Prologis can offer users the combination of immense scale and a roadmap for future growth.

Skybox Eyes Horizons Beyond Texas

Skybox Datacenters is based in Dallas and focuses on purpose-built facilities for the wholesale data center market, working with enterprise, hyperscale and colocation customers. Skybox Chicago I will be the company’s first project outside of Texas.

The Chicago news continues a busy week for Skybox, which announced Tuesday that it has sold its Houston I facility to Element Critical. Under this new ownership structure, Skybox will continue to operate the data center, handling management, facility operations and leasing.

The Chicago data center market occupies a central place in America’s geography and mission-critical infrastructure. The Windy City is a major hub for Internet and financial infrastructure, with active communities of data center users and service providers.

Data center activity in Greater Chicago has surged since 2019, when the region’s competitive position got a boost as Illinois approved new tax incentives. That included a robust 49 megawatts of leasing in the fourth quarter of 2020, and 71 megawatts for the full year, third-best in the U.S. after Northern Virginia and Silicon Valley, according to real estate sources.

An illustration of the Skybox Chicago I project in Elk Grove Village, Illinois. (Image: Skybox Datacenters)

The 2019 state incentives provide exemptions from state and local sales taxes on data center equipment for 10 years if they meet investment and hiring targets. The Skybox project also has lined up a Class B property tax exemption from Cook County, which provides developers with incentives for property renovations.

The Skybox Chicago I project at 800 East Devon in Elk Grove Village will be developed as a powered shell project. It will be supported by 30 megawatts of power from the nearby Comed Itasca power substation, and have access to fiber routes that traverse Elk Grove Village, which abuts the infrastructure-rich O’Hare Airport. The neighborhood is home to data centers for Digital Realty, Equinix, EdgeConneX, STACK Infrastructure and Cyxtera.

Element Critical Buys Skybox Houston Facility

Skybox was founded in 2014, targeting an opportunity in the growth of “Big Data” in the energy industry, with a focus on 3D seismic imaging in high-power-density environments. Its Houston campus hosts one of the world’s most powerful computing systems, a DUG Technology installation that houses 40,000 servers in liquid coolant tanks.

The sale of the initial Skybox data center in Houston fits with the strategy of Element Critical, which is seeking to build a national platform of data centers by using sale/leaseback transactions to buy facilities with existing tenants and available expansion space.

“Texas is a strategic market for Element Critical, and we are excited to have acquired a facility in the Houston Energy corridor where we can apply our hands-on operational expertise in delivering hybrid colocation services in Houston and across our growing data center platform,” said Ken Parent, CEO of Element Critical. “The Skybox team will continue to play an important role in supporting Element Critical in many key aspects of the project, particularly as they relate to serving the impressive tenant roster they have developed.”

In working with Prologis, Skybox is the latest data center operator to line up a partner that can help with capital or real estate, or both. On the real estate front, Switch is teaming with FedEx to create an edge computing network, while American Tower has also begun working with edge data center specialists. For companies with extensive real estate holdings, distributed networks of data centers offer an opportunity to monetize their holdings in new ways.

Meanwhile, global investors are raising billions of dollars to invest in digital infrastructure, citing extraordinary demand for capital to fuel the data economy. Investment interest in data centers has been boosted by the growth of hyperscale computing, where the tenant is a giant corporation with excellent credit, lowering the risk profile for investors.