CAPRE’s Chicago Data Center Summit Preview: Q&A with Andy Cvengros, JLL

CHICAGO, IL — Andy Cvengros is Vice President of Data Center Brokerage at Jones Lang LaSalle. Andy specializes in enterprise tenant representation throughout the data center lifecycle including leasing/purchase negotiation, site selection, alternatives analysis, tax incentive negotiation and asset disposition. After spending several years in HP’s Critical Facility Services group, he aims to bring together facilities, IT and the business to form a cohesive data center strategy. Andy has served as the Vice President of the Chicago AFCOM chapter and currently manages Data Center Connection, a multi-market networking group. Andy will be a featured speaker at CAPRE’s upcoming Chicago Data Center Summit, March 19. In this Q&A, we connected with him to learn more about the lay of the land in Chi-town.

CAPRE: How has 2019 been for the Chicago data center arena?

Andy Cvengros, Vice President of Data Center Brokerage, JLL

Cvengros: It has been very active across the board. My practice focuses on tenant representation. From an activity perspective, we’ve seen quite a bit of renewed activity from the west coast and east coast for client requirements going into colo facilities. A lot of groups are really trying to reduce their footprints and overall costs, and so across the board there’s a very promising 2019 across the books.

CAPRE: What makes Chicago unique, as opposed to other major data center markets?

Cvengros: Well Chicago serves as the central U.S. node for all telecommunications. Most cloud devlopment has been done here, either here or in Dallas. And most of the activity in the upper Midwest is local to here — in terms of comparing Chicago to Minneapolis or Detroit or Indianapolis, 98% of all leasing happens in Chicago.

CAPRE: Where is Chicago going next? What does the rest of 2019 have in store for us?

New SquareCvengros: A few new developments are coming up. Iron Mountain has a new development, RagingWire has a new land development. You have DataGrid in Hammond, Indiana. And you’re seeing a lot of new product coming to town with CoreSite. Four or five new data centers are being developed now, so in 2020-2021, there will be a lot of new product and that should spur future activity by the big Cloud guys. We also have legislation in the works now for a data center sales tax incentive. We think we have the right administration in to approve something like that for further growth.

CAPRE: What are the biggest hurdles to getting a deal done in Chicago?

Cvengros: To be honest, there are no major challenges. You have a lot of high-quality product in a lot of sub-markets. And providers are willing to get very aggressive on pricing for deals. From that extent, there’s really no challenge on that front. The sales tax for out-of-state companies has concerned some people, but they’re working to make a change to that.

CAPRE: What players are setting the pace in the Chicago data center game?

Cvengros: The STACK Infrastructure group has acquired the T5 data center and is now leasing on that facility. Also, CoreSite is developing a brand new data center in the downtown market, which is very difficult to do, and that should alleviate some of the constrained capacity there. It’ll help users get aggressive rates. Those guys are changing their approach a bit. Iron mountain is building a new data center as well.

CAPRE: What’s the lay of the land in the data center space?

Cvengros: You have three major sub-markets. Downtown, or the central business district, and then you have Elk Grove, which includes Itasca, Franklin Park, or the O’Hare area. And then you have Aurora, which is farther west. They have different draws. Cloud-based companies prefer to be in Elk Grove, and the enterprise is traditionally focused on Aurora, but it’s been pretty even across the board.

CAPRE: We’re looking forward to seeing you at CAPRE’s upcoming Chicago Data Center Summit. What will be top of mind for the average data center player attending this event?

Cvengros: The sales tax initiative is something that’s top of mind for everybody. The Illinois Chamber of Commerce is doing this to put Illinois on par with Ashburn, Virginia. We have an optimistic outlook for that. We’re hopeful something will get passed. We have a new governor in town who has invested in data centers in the past and he knows the benefits of approving something like this.

CAPRE: Got it. Thanks for your time, Andy. We’ll see you in Chicago!