Server hubs take over disused industrial space

The only office drone in vXchnge's new space at 1500 Spring Garden is the drone of cooling fans for the high-end computer servers stacked there in black metal cabinets.

The company's fresh digs in Philadelphia are the latest part of the former GlaxoSmithKline pharmaceutical-manufacturing plant to be turned into a data center, a digital thoroughfare for the packets of information that computerized devices transmit and receive.

Data-center operators such as Florida-based vXchnge are setting up shop in disused factories and warehouses in big cities, close to the customers who use them as doorways to the Internet.

That has led to the conversion of millions of square feet of industrial space into high-tech hubs nationwide, with more coming as developers discover that onetime factories and warehouses have the bones for a digital makeover. It's a twist on more familiar conversions to office space, such as Urban Outfitters' vintage-warehouse headquarters at the Navy Yard.

Industrial buildings offer "a big rectangle with heavy floor weights and decent clearances between the floor plate and the ceiling," vXchnge CEO Keith Olsen said. "That's what we look for."

Last month, vXchnge, which has 15 data centers nationwide in cities such as Santa Clara, Calif., and Austin, Texas, opened its 70,000-square-foot Philadelphia facility after installing backup power sources and cooling systems, among other pricey upgrades.

Iris scanners now regulate entry into the server-filled facility from a hallway shared with the offices of a medical trade association. Inside, concrete columns soar through a latticework of power cables, fiber-optic lines, and cooling ducts on their way to the high ceiling.

Sungard Availability Services, another data center operator, operates its own 123,356-square-foot facility elsewhere in the 1947 building, which also accommodates more traditional office users such as engineering and defense contractor Day & Zimmerman and insurer Independence Blue Cross.

Other old Philadelphia industrial buildings have been converted almost entirely to data centers: the former Terminal Commerce Building at 401 N. Broad St., completed as a warehouse in 1930; and the Lasher Printing Co. building at 1309 Noble St., built in 1927.

In Chicago, meanwhile, one data-center operator is revamping part of a historic bakery building; another is working on the transformation of the former printing building of the Chicago Sun Times.

And commercial brokerage Savills Studley is evaluating decades-old former warehouses in California's Silicon Valley and Ashburn, Va., to retrofit into a data center for a client in Asia, said Rick Drescher, a managing director.

These buildings share wide open spaces, high ceilings, and strong floors, so operators can pack them with heavy equipment, said Dan Schaefer, a director with SAP America's data-center infrastructure department.

Their urban locations put them close to the fiber-optic trunk lines that connect Internet users, and their past lives powering industrial-era machinery give them access to the massive amounts of electricity they need, said Schaefer, who visits centers around the world through his work.

Power supply is so integral to these projects that they are measured in megawatts as well as square feet.

"You have all this infrastructure sitting there," Schaefer said. "By taking these old facilities and reclaiming them and converting them into data-center space, you're very easily able to tap into all that."

Some planning experts say the conversions aren't the best use of industrial space for cities seeking to rejuvenate blighted manufacturing zones.

Traditional offices employ more people than data centers, potentially offering a greater economic benefit to surrounding areas, said Harris Steinberg, executive director of the Lindy Institute for Urban Innovation at Drexel University.

"They're definitively urban killers," Steinberg said of data centers. "They kind of suck the life out of an area because there's no human activity."

Still, a wholesale conversion of industrial buildings to data centers is unforeseen, because just a few structures are good candidates for such a revamp, said Patrick Lynch, managing director of the Data Center Solutions division of CBRE, a commercial real estate services firm. They can't be prone to risks such as earthquake or flood damage, he said.

Thus, the adaptive reuse of industrial buildings is a small fraction of the amount of data-center capacity brought online each year, Lynch said.

Nearly 100 megawatts' worth of "colocation space" - data centers built to accommodate multiple companies' equipment - were delivered nationwide during the first half of 2015 alone, according to CBRE. Philadelphia's biggest center with an industrial past - 401 N. Broad St. - has a capacity of about 25 megawatts.

Conversions are also expensive: about $500 a square foot, compared with $150 in Philadelphia to transform into Class A office space, according to CBRE. But Lynch said data-center rents can work out to hundreds of dollars a square foot, compared with the roughly $29 for Class A office space in Center City logged in CBRE's most recent tally.

vXchnge's Olsen said old industrial buildings play an important role in the country's data infrastructure, because their urban locations put them near the companies and consumers who connect to the Internet with an ever-growing array of devices.

It's faster for users to send data through a nearby center than it would be for them to directly ping the bigger, farther-flung facilities where large companies such as Facebook, Netflix or Comcast maintain server farms, he said.

That speed is especially important for companies such as online retailers that want to make sure slow connections don't frustrate users into abandoning shopping carts before completing their purchases, Olsen said.

It also allows for content such as movies and online video games to be delivered more seamlessly, he said.

"Think of it as hubs and spokes," Olsen said. "It becomes more efficient."

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