Many commercial sectors hit pause earlier this year after the onset of the coronavirus pandemic, and in the Chicago area, data centers were no different. New absorption of data center capacity sank in the first half of the year, but experts say such activity has already accelerated and will continue the rest of the year.

“People have been kicking the can down the road,” JLL Senior Vice President Andy Cvengros said.

Absorption of local data center capacity was 6.6 megawatts during the first half of the year, he said. But in the second half, absorption has already shot up to 20.5 megawatts.

Other kinds of activity are also ramping up. Data center providers and social media companies like Facebook are pushing forward with plans to add significant data center capacity, especially in suburbs such as Elk Grove Village. And banks, insurance companies, healthcare firms and many other types of businesses will likely continue trying to cut costs and boost efficiency by opting out of running their own data center operations in favor of data center specialists.

“Anyone who is not in the business of owning or operating data centers is trying to get out,” Cvengros said.

“They’re expensive capitalwise and expensive to operate,” JLL Managing Director Sean Reynolds added.

He estimates operating their own data centers could cost companies a 15% premium. Helping customers cut expenditures could soon put pressure on the specialists.

“Certain providers will become limited on capacity in the next 12 months as major leases get done,” according to JLL’s Chicago data center report on the first half of 2020.

“It’s difficult to crystal ball the demand for data centers, but the arrow is definitely pointed up,” Reynolds said.

That demand will help change the metro region’s landscape. Facebook officials said in June the firm was ready to begin developing an $800M facility in DeKalb, a city about 65 miles west of Chicago.

And CoreSite, one of the nation’s largest data center firms, just put the finishing touches on the first phase of its CH2 facility at 550 West 14th Place on Chicago’s Near South Side. The 56K SF facility has 6 megawatts of capacity, and it is the first ground-up, purpose-built data center within city limits. Developers previously took over and repurposed old structures such as Digital Realty’s mammoth data center at 350 East Cermak Road, the former R.R. Donnelley Co. printing plant. CoreSite plans to eventually expand CH2 to 169K SF and 18 megawatts of capacity.

That capacity will be needed if the nation continues its remote working experiment into the future. The millions of Zoom calls, along with e-learning programs now used every day by homebound students, will keep pressure on cloud providers to grow, Reynolds said.

He said it isn’t a surprise that the nation’s big players are starting to establish more operations near Chicago. In 2019, the Illinois Legislature created a set of incentives exempting many new data centers from sales taxes on the wide array of equipment each needs to constantly replace, an especially important consideration for the large, hyperscale centers operated by companies like Facebook.

“It was a very meaningful bill that was passed,” Reynolds said.

One year ago, developers had 7 megawatts of capacity under construction. That has increased to 13 megawatts, with another 27 megawatts planned, according to JLL’s report.

But Chicago probably won’t see much of the expected development activity. Proper greenfield sites for data centers are in short supply within city limits, and developers are more likely to choose somewhere like northwest suburban Elk Grove Village, the region’s data center powerhouse.

“Elk Grove Village has been Main and Main for probably 15 years,” Reynolds said. “Data centers have a herd mentality; they like to be in close proximity to one another.”

That makes it easy for prospective users to quickly tour facilities. The suburb is also adjacent to O’Hare International Airport, ComEd’s largest customer, and the electric utility has made significant investments into its power infrastructure, a key consideration for any data center operator, Reynolds said.

CoreSite and Facebook probably won’t be the last big names to open shop in the Chicago region, he added.

“The providers will follow the demand, so we’ll see some new flags planted here one year from now.”