Empty office towers in Los Angeles are quickly becoming data centers latimes.com
Where Wilshire Boulevard begins in downtown Los Angeles, thousands of miles of undersea fiber-optic cables disappear into an ordinary-looking office tower.One Wilshire is the mother of all data centers in the West, a discreet terminus for major digital links between Asia and North America that help sustain the world’s bottomless need for data storage and computing power.
Once a workplace for lawyers and other white-collar types, the mid-century office building‘s 30 floors are now stuffed with cables, pipes, coolers, generators and other equipment needed to support online functions that power the economy and our private lives at unmatched speed.
“We’re all consumers of data centers,” whether its scrolling social media on our smartphones, watching streaming services such as Netflix on TV or ordering a dog food delivery on our our laptops, said Maile Kaiser, chief revenue officer of data center operator CoreSite, the largest tenant in One Wilshire. “Any content that we make is stored in a data center.”
The digital transformation of One Wilshire, which is nearing completion with the recent departure of one of the last conventional tenants, is part of a larger real estate boom underway across Los Angeles County.As artificial intelligence and cloud storage hoover up more and more space on the nation’s computer servers, real estate developers are racing to build new data centers or convert existing buildings to data uses. The need is so great, they’re having a hard time keeping up with demand as businesses in search of secure spots for their servers rent nearly every square foot that becomes available. Large-scale backup generators to keep the 24-7 operations running in the event of a power failure are in short supply.
Electrician Oscar Rivas works on a new generator system on the third floor of One Wilshire, a high-rise office building that has been almost entirely converted into a data center in downtown Los Angeles.
Construction of new data centers is at “extraordinary levels” driven by “insatiable demand,” a recent report on the industry by real estate brokerage JLL found.
“Never in my career of 25 years in real estate have I seen demand like this on a global scale,” said JLL real estate broker Darren Eades, who specializes in data centers.
The biggest drivers are AI and cloud service providers that include some of the biggest names in tech, such as Amazon, Microsoft, Google and Oracle.
With occupancy in conventional office buildings still down sharply following the impact of the COVID-19 pandemic and property values falling, data centers represent a rare ripe opportunity for real estate developers, who are pursuing opportunities in major markets like Los Angeles and less urban locales that are served by plentiful and preferably cheap power needed to run data centers.
“If you can find a cluster of power to build a site, they’ll come,” Eades said of developers.
Construction is taking place at an “extraordinary” pace nationwide and still not keeping up, the JLL data center report said. “Vacancy declined to a record low of 3% at midyear due to insatiable demand and despite rampant construction.”
Development increased more than sevenfold in two years, with the pipeline of new projects leveling off in the first half of 2024, a potential signal that the U.S. power grid cannot support development at a faster pace.
But when projects currently under construction or planned are complete, the U.S. colocation mark |
