Switch and Data Leases 163,000 SF

NORTH BERGEN, NJ-Switch and Data has signed a long-term lease for all of the 163,000-sf industrial building at 5851 West Side Ave. here. The Tampa, FL-based Internet exchange and collocation services company will utilize the space as a data center.

Building owner Hartz Mountain Industries of Secaucus, was represented in-house by SVPs Snezana Anderson and Remy deVarenne and VP Matthew Corpuel of CB Richard Ellis. Hartz was represented in-house by Charles Reese, VP of leasing. The deal carries a total term of 25 years including extensions; further terms were not released.

For Switch and Data, the deal is a response to its need for more capacity in the New York metro area, and the site will have access to more than 300 networks in its existing sites in the region. With the expansion, Switch and Data will now have a total of 253,000 sf in the market.

“This lease represents Switch and Data’s first New Jersey facility,” CBRE’s Anderson says. “It’s part of the company’s overall expansion strategy to satisfy growing customer demand.”

Keith Olsen, the company’s CEO notes that “demand for rich media is driving exponential IP packet growth. This growth requires scale across the entire supply chain, from content origination through delivery.”

Switch and Data CMO Ernie Sampera says that “this lease perfectly met our real estate needs,” noting that the site search took 10 months. “This was the best option for our capacity expansion, because of the combination of availability of electrical power to support our standards, existing data center infrastructure and the benefits offered by the State of New Jersey for new businesses.”

Switch and Data will move into the building in stages, related to its capacity demands and the need to build-out the site’s interior. Hartz will lead that build-out, and Switch and Data officials anticipate an initial move-in starting in the fall. Company officials also estimate that the capital expenditures for the project will be $75-80 million in 2008, and a total investment of $105-115 million at build-out.

“We expect to use cash on hand and our strong balance sheet to finance the growth,” Olsen says. “This expansion is in addition to the previously announced investments in Dallas, Sunnyvale [CA] and Toronto.”

The building, vacant when the lease was signed, is a former Sungard data/disaster recovery center. Those operations had been relocated to a newer, larger site in the region.