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Atlanta’s Data Center Market is Booming But Running Out of Room

Data center developers want a piece of Atlanta more than ever, but soon Atlanta won’t have anything left to give.

Atlanta's Data Center Market is Booming But Running Out of Room

Data center developers want a piece of Atlanta more than ever, but soon Atlanta won’t have anything left to give.

Good morning. In today’s email: Data center developers want a piece of Atlanta more than ever, but soon Atlanta won’t have anything left to give. Nashville’s growing at an unprecedented rate after the city nixed parking mandates and made way for affordable housing. Meanwhile, Steve Cohen wants to build a casino in Queens next to Citi Field, but he needs the city’s support to do it. Let's dive in!

🎧 Podcast of the Day: Steve Robinson is the former CMO of Chick Fil A. In this episode of The FORT, Chris Powers and Steve discuss the incredible story behind Chick Fil A's growth and the thriving culture that got them there. Plus, why every company should have a purpose for existing.

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DATA CENTER DEMAND

Atlanta's Data Center Market is Booming But Running Out of Room

Cheap, abundant land has turned Atlanta into a national hub for data centers. But with the city’s data center footprint set to double as developers snatch up land faster than ever, the sector may be forced to find a new city soon.

Growth spurt: Though it’s only the 8th-largest national data center market by total inventory with 338 megawatts of capacity, Atlanta’s data center leasing grew tenfold in 2021 and the first half of 2022, according to JLL. While the city only had 30 megawatts of data center space under construction a year ago, it’s at 175 megawatts now.

Not just peaches: Tech firms and colocation operators have been flocking to Atlanta because of affordable land, cheap power, and statewide tax incentives. Other data center hubs, like Northern Virginia, are nearly at carrying capacity, which means developers have to resort to pricier multistory complexes if they want to build more data centers.

THE TAKEAWAY

Vertical future: Cloud computing firms are hungrier than ever for data centers, but Georgia’s not getting any bigger. With 70 megawatts of annual growth projected for the next five years, the power supply and outage concerns that grip Northern Virginia are likely to come for Atlanta, too. Multistory data centers are in the city’s near future.

HOUSING > PARKING

Nashville Sees Affordable Housing Surge After Dropping Parking Mandates

Nashville—the #1 market for real estate investors this year—has become the most recent city to encourage affordable housing developments by removing parking lot mandates.

New kids on the block: Apartment rent growth in Nashville surged 17.1% in Q1 2021 before falling to 5.2% by the end of the year. According to CoStar, more than 3,200 apartments will be added this quarter—a new city record—and most of the construction is happening in places where parking mandates were lifted.

Freedom of choice: Nashville councilman Bob Mendes said that removing parking requirements in other areas a dozen years ago had no “obvious negative impact,” in part because the removal of parking mandates doesn’t prohibit the construction of parking lots. Developers can still add parking if they want to and are willing to pay the extra costs.

THE TAKEAWAY

Park on the street! Around 20 U.S. cities have thrown out parking requirements for new developments as many people now rely on public transit (when they do go into the office). This trend is likely to continue, but only in cities with strong public transit networks. A city’s investment in public transit will likely result in the eventual elimination of parking mandates, which incentivizes affordable housing construction.

CITISIDE CASINO

Steve Cohen Bets on Building a Casino in Queens by Citi Field

Billionaire and Mets owner Steve Cohen has gone all-in on his bid to build a casino in Queens by the Mets’ Citi Field after Mayor Eric Adams backed plans to build a $780M mixed-use complex nearby.

Big spender: Cohen has sunk a lot of cash into efforts to garner support for his plan, like donating $1.5M to Mayor Adams’ campaign last year. The multibillionaire hopes that his new project—which would include a 25K-seat soccer stadium for the NYC Football Club, a hotel, and 2.5K units of affordable housing—will boost foot traffic to his casino, too.

There’s just one problem…Cohen wants to build his casino on Citi Field’s parking lot. But it’s technically parkland, and Cohen would need to get the designation removed to build on it. To get around this, Cohen has promised to replace the lost parking spaces with a multilevel parking garage. Senator Jessica Ramos has said that she wants to hear from the public before signing off on the plan.

THE TAKEAWAY

Bidding war: Cohen is fighting Related Companies for the last of three available state casino licenses. Related, which partnered with former Mets owners Fred and Jeff Wilpon, wants a license to build a casino in Manhattan’s Hudson Yards. Who wins this bidding war may come down to whether Cohen can get enough support to nix the parkland designation on Citi Field’s parking lot.

📰 Editors' Picks

  • Silver linings: Oaktree Capital (OAK-A) sees high interest rates and a looming recession as opportunities to acquire struggling companies.

  • Aaaand cut(s): Global brokerage giant Avison Young joins the list of brokerages that have reduced their headcounts due to the economic downturn.

  • Flock to FL: A record 57 companies have relocated or expanded into Miami-Dade county this year—and plenty more are on the way.

  • Return of the Iger: The entertainment titan (DIS) took a messy but welcome step back by replacing current CEO, Bob Chapek, with his popular predecessor, Bob Iger.

  • Prologis goes progressive: The warehouse giant (PLD) is installing electric truck charging stations as commercial vehicles slowly transition to electric power.

  • One-family wonder: Commercial brokerage JLL wants to corner the single-family market by acquiring up to $500M in single-family homes over the next two years.

🤝 Deals & Dealmakers

  • Sights on SoHo: Thor Equities Group just sealed the deal to refinance a boutique hotel in SoHo with a $50.1M debt package.

  • Pining for Florida: New York-based Westpine Partners just bought a the Brickell site in downtown Miami from Alta Development for $15M.

  • REZI’s rich: Black-led proptech rental platform REZI just secured a cool $100M in debt financing from Stratos Credit.

  • Prime time: North Carolina Retirement Systems will invest $300M in U.S. self-storage properties with the help of Prime Group.

  • Pension fun(d): The Maryland State Retirement and Pension System just approved a $100M investment into the MetLife Core Property Fund.

  • Join the club: The Restaurant People have joined forces with the world-famous club E11EVEN to put Giselle Miami on its rooftop.

  • Biosafety big bucks: MilliporeSigma is spending $286M to build a biosafety testing site, which could create 500 jobs in Rockville, MD.

📚 Learning corner: With the real estate market in a fragile place due to rising rates and inflation, now more than ever may be an excellent time to consider a cost segregation study. But how does it work, and what are the benefits for real estate investors? (Read more)

📈 CHART OF THE DAY
💼 JOB BOARD

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