Americas Data Center H2 2024 Update

CHICAGO AMERICAS PRIMARY MARKET

HOFFMAN ESTATES

ELK GROVE VILLAGE

Colo

Hyperscale Self-build

KEY INDICATORS*

NORTHLAKE

DOWNTOWN CHICAGO

1,159MW In Operation

471MW 2024 Colo Leasing

AURORA

169MW Under Construction

5.4% Colo Vacancy

*Definition: Key indicators are based on operational Hyperscale Cloud, Colo, Edge & Telco data centre facilities in the market and excludes Captive & ICT.

MARKET OVERVIEW Like other established U.S. markets, demand for data center space has been rising in Chicago. Data center leasing activity in 2024 totaled 471MW for the year — a 257% increase over the 132MW leased in 2023, most of which occurred in data centers that are either planned or under construction. While colocation availability in Chicago, at 49MW, is greater than in other established markets, it is still limited, and most available space isn’t suitable for large-scale applications. Competition for land has continued in Chicago, particularly in Elk Grove Village near the O’Hare industrial corridor. This competition for available parcels is pushing buyers toward brownfield development if they wish to stay within the metropolitan area or outside of Chicago for larger greenfield parcels. Limited land availability, power constraints and Illinois’ Biometric Information Privacy Act (BIPA) is prohibiting further growth, which has caused an explosion of growth in northwestern Indiana, extending into southeastern Michigan. To attract Illinois’ demand, Michigan passed a data center sales tax abatement incentive. However, not all demand is leaving the state — land acquisitions in Illinois have been increasing outside the Chicago MSA. Microsoft, CyrusOne, Equinix and Aligned have all made sizeable land acquisitions along the westbound I-80 corridor. Iowa, much like northwestern Indiana and Michigan, has also seen growing interest, particularly in the Quad Cities area. Nevertheless, Chicago has continued to attract hyperscale users and colocation providers, and the planned capacity pipeline continues to grow as these groups seek out and acquire land suitable for data center development. Currently, 2.6GW of data center capacity rests in the planned pipeline and 7% has already been leased by data center users that wish to be in the Chicago market. Much of the planned development is concentrated in Elk Grove Village, which represents more than a 1GW of planned capacity, but planned development is also high in Hoffman Estates and Aurora.

ECOSYSTEM DEVELOPMENTS •

QTS received approval to construct a second data center on their Ashland Ave. campus, which has the potential to scale up to 125MW. The approval required an amendment to QTS’ original development plans. • Midcontinent Independent System Operator (MISO) approved a $21.9 billion long-range transmission plan, with projects expected to come online from 2032 to 2034. The plan includes a 765kV transmission backbone across the Midwest, designed to enhance power flow, improve reliability, and support new data centers and industries. • Power availability and grid infrastructure remain significant obstacles for new data center development. Current power delivery estimates for new data centers under 50MW could reach 18-24 months, while larger projects may not be able to secure the necessary power until 2028 or 2029. • Demolition is underway at the former Sears campus in Hoffman Estates, where Compass Datacenters plans to develop a five-building data center campus. Construction on the 200-acre site is expected to begin in 2025. • Microsoft acquired 506 acres across multiple parcels in Plano, Illinois, west of Chicago. The property was recently annexed into Plano by the city council and rezoned for data center development. • The Chicago City Council approved the Chicago Data Residency Ordinance, which took effect January 1, 2025. The ordinance provides financial incentives for data centers built in the city, but developers must address power delivery solutions, as distribution lines and substations needed for new data centers are lacking.

CUSHMAN & WAKEFIELD | AMERICAS DATA CENTER MARKET OVERVIEW