Data centers booming in Illinois with addition of $2.5 billion site planned for former United Airlines headquarters

Construction began on the site of the former United Airlines headquarters in Mount Prospect, and recent demolition on the property paved the way for the creation of a $2.5 billion data center campus expected to launch in 2024. .

Officials at CloudHQ, a global data center provider headquartered in Washington, DC that specializes in the design, development and operation of “hyperscale” data center facilities, said the 1.5 million campus is expected to of square feet generate between 75 and 100 jobs for each. of three planned buildings, including operations, maintenance and security positions.

The site, which is bordered by Dempster Street and Algonquin and Linneman streets, is anticipated to generate up to 3,000 construction jobs during the construction of the three buildings.

Hyperscale data centers typically house hundreds of thousands of computer servers in each building to serve the data storage needs of the world’s largest companies, officials said in a statement.

“Chicago has long been a hub for digital infrastructure for our customers, who already have a presence in the market,” said CloudHQ spokesman Brett Burnette.

Burnette declined to name the CloudHQ customers who are expected to host their servers on the site, citing “strict confidentiality agreements.” But he said CloudHQ’s clients represent “some of the largest Internet providers in the world.”

In addition to the company’s global headquarters in Washington, DC, and European headquarters in London, CloudHQ has offices in Frankfurt, Germany, and São Paulo, Brazil, and data center campuses in Northern Virginia.

The development is the eighth new data center project to launch in the past year in ComEd’s service territory, which covers northern Illinois, ComEd officials said in a statement. ComEd will build a new substation on the site to support CloudHQ operations.

“Companies like CloudHQ continue to look to Northern Illinois and our service territory for unparalleled access to clean, affordable and reliable energy that is essential to meeting the demands of today’s economy,” said Gil C. Quinones, CEO of CloudHQ. ComEd, in a statement. statement.

The first phase of the three-building project is anticipated to be completed in 2024, with two additional buildings completed in the next three to five years based on demand, officials said.

Bill Cooney, director of community development for Mount Prospect, said the village annexed the 50-acre site in unincorporated Cook County in 2017, about a decade after United Airlines began vacating the property and moving its employees to Chicago, finally settling in Willis Tower.

“The town annexed the property so we could have more control over its future,” Cooney said.

Cooney said CloudHQ will receive a 6b tax incentive from Cook County for the project, which reduces the property assessment level from 25% to 10% for the first 10 years, 15% by year 11 and 20% in the year 12.

After year 12, the assessment level reverts to the full 25% for benefited property, Cooney said.

While local taxing districts will benefit from increased property values, the Class 6b incentive adds tax savings of approximately $2.5 million per year for the business once fully assessed, assuming the estimated value of $100 million, he said. Cooney.

The company will generate more than $1 million a year for the town in electric utility taxes and will donate $2 million to the Mount Prospect Park District for improvements to local parks, he said.

The Class 6b program is designed to encourage industrial development by offering a real estate tax incentive for the development of new industrial facilities, the rehabilitation of existing industrial structures, and the industrial reuse of abandoned buildings, according to the Cook County Assessor’s Office.

According to ComEd, 2019 was a “turning point” for the data center industry in Illinois, following the passage of new state legislation offering a tax incentive to encourage tech giants and other companies to locate their data storage facilities in the state.

As part of a $45 billion capital construction plan, the incentive exempts qualified data centers from state and local sales tax on on-premises equipment such as heating and cooling equipment, servers and data racks. storage.

Since the passage of the Data Center Incentive Program, ComEd has seen 15 new data center projects, including six projects that generated more than $2 billion in local investment in 2021, the company said.

In ComEd’s northern Illinois service territory alone, there are now more than 70 operating data centers, with six under construction and another 13 in early design or planning stages, the company said.

Real estate firm Cushman & Wakefield ranked Chicago fourth, along with Atlanta, on its 2022 list of top cities for data centers, behind Silicon Valley, Singapore and the number one location, Northern Virginia. The report cited Chicago’s “considerable incentives, low cost of land, large development pipeline, and lower energy costs than most large data center markets.”

CloudHQ’s Burnette said the data center campus will require few large trucks and, with only a few hundred employees at most, won’t increase traffic in the neighborhood.

“We will try to integrate and continue with our business, without being a disruption to the community,” Burnette said.

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