The New York Telephone Company building at the foot of the Brooklyn Bridge is not among the city’s most loved, to put it charitably. It was built in 1975 as a switching control center for the phone company but has been largely vacant for years, despite the large “Verizon” sign that adorns its forbidding facade.
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David W. Dunlap/The New York Times
The New York Telephone Company building at 375 Pearl Street, seen from the Brooklyn Bridge.
Come this fall, while the building may look much the same on the outside, on the inside it will be pulsing with thousands of terabytes of data. The Sabey Corporation, a developer and operator of data centers based in Seattle, acquired the condominium that makes up a majority of the building for $120 million last year with a minority partner, the developer Youngwoo & Associates. (Verizon will continue to occupy and own three of the 32 floors.)
The seller was M&T Bank, which took control of the property from Taconic Investment Partners after that developer’s $350 million plans to convert the building into an office tower fell through.
The condominium, at 375 Pearl Street, will be one of the city’s largest data centers when it opens, at roughly one million square feet, with access to up to 40 megawatts of electricity, enough to power 2,000 average-size homes.
“We like to think about our data centers as just one large computer, and this computer is going to help drive the New York economy into the 21st century,” said David A. Sabey, the company’s president.
There are a handful of other data centers across the city, notably several that lease space at 111 Eighth Avenue, the huge Chelsea office building that Google acquired last year. In the wake of that deal, there is growing concern that as these data centers’ leases expire Google will take over the space for its own use, said Wes Rudes, a senior vice president at the New York branch of the brokerage company Cresa.
“There have been more than five million square feet of data center deals done in the tristate area in the last three years,” Mr. Rudes said, “so there is a ton of demand and a lot of companies are in the market.”
Google declined to comment.
Another large data center is at 60 Hudson Street, the landmark Western Union building in TriBeCa. DataGryd, the company that runs the building’s data center, is offering four 60,000-square-foot floors with four megawatts of power available per floor, “although more power is available if needed,” said Peter Feldman, the company’s chief executive. DataGryd is also building a cogeneration plant, which will make more power available at the site.
A third data center site is at 32 Avenue of the Americas, the historic former AT&T building. Also a landmark, it has 20,000 square feet of space and 15 megawatts of power currently available, according to John J. Gilbert III, the chief operating officer for Rudin Management, the landlord.
Michael G. Morris, a senior managing director at Newmark Knight Frank and part of its data center consulting group, said there were few opportunities in Manhattan to build modern data centers. Of the Verizon building, Mr. Morris, who is representing the building, said: “The introduction of a purpose-built data center with new systems will be well met in a marketplace with limited supply and antiquated product.”
Mr. Sabey said the company spent two years searching for a facility in the Northeast before it settled on 375 Pearl Street. Because the company was not proposing to turn it into an office tower, he said, “we could mine an intrinsic value that other users couldn’t, and as a result we got a wonderful property at a very low cost.”
The building works perfectly as a data center, Mr. Sabey said, because its floor plates can withstand 200 to 400 pounds per square foot, compared with just 100 pounds per square foot for most office towers. It also has access to a large amount of power, and its location in a high-density area is ideal.
Proximity to data centers is important for several industries, including Wall Street traders, where speed is critical and an additional nanosecond for data to travel over a longer distance would put the traders at a disadvantage. In addition, moving large amounts of data requires extensive bandwidth, and this can be expensive. “If you have everything in one building, moving data from a sequencer to a disk drive is much cheaper if you aren’t running over a leased carrier line. As distance increases, you must take into account the price of maintaining the bandwidth you need,” Mr. Sabey said.
Even the building’s much-maligned facade, with its heavy vertical lines and small windows, is an advantage. “It is ironic, because we like the look of the building,” Mr. Sabey said. “It has a good cover that won’t let in a lot of heat gain, and it is very stout — it is really very data-centeresque.”
While Sabey plans to leave the facade alone, it is gutting the inside of the building. “This is definitely the tallest data center, and maybe the largest high-rise data center in the world,” Mr. Sabey said.
The building should be ready for occupancy by the fall. In some cases, the company will lease directly to tenants, like large financial institutions or hospitals, and also possibly to outside data center companies that can run their own data centers inside the building. While no occupants have signed a lease, “we are negotiating business terms with a number of prospective tenants,” Mr. Morris said.
As for the rent, data center occupants sign agreements much like traditional office leases, but the pricing is often based on kilowatts used per month rather than square feet occupied. While he declined to give an asking rent, Mr. Morris said several factors went into pricing: the amount of power that is available, the reliability of the power based on battery backups and generators, and services offered like maintaining an ambient temperature to keep the computers working at optimal speeds. Average rents in Manhattan range from $275 to $350 per kilowatt per month, he said. In addition, tenants pay for their electricity consumption.
Industries like financial services, law firms and online commerce companies now demand the use of data centers. The Sabey Corporation hopes to tap into the city’s growing life sciences industry, which Mr. Sabey said “could eventually make up as much as 20 percent of our business in New York.”
The city has begun several efforts to spur the technology and life sciences industries, including the recent announcement of a technology campus at Roosevelt Island. The data center at 375 Pearl Street could help provide the infrastructure to support the city’s initiatives, said Kathryn S. Wylde, the president and chief executive of the Partnership for New York City, a network of business leaders.
“We are top in the world when it comes to scientific research,” she said, “but what we haven’t done is commercialize this research, and this data center will help us do this.”
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