• Hyperscale cloud leasing led by Microsoft and Oracle in Multi-Tenant Data Centers (MTDC) drove a 25% increase in leasing activity from 2015; a historical high.
• Large cloud providers shifting from speculative leasing to pre-leasing during the past 15 months have been a welcome occurrence to the overall MTDC market.
• Northern Virginia (Ashburn and Manassas) and Chicago continue to be a hotbed and have dominated MTDC leasing activity for 2016. We anticipate that construction in key markets will be met by strong leasing activity in the first half of 2017.
• New projects announced by CyrusOne, T5, EdgeConneX and Digital Realty, along with unprecedented data center leasing activity contributed to record leasing in the Chicago market.
• Significant sale–leaseback activity will continue to create shadow inventory and should augment the current scarcity of supply as evidenced in March by CME selling to CyrusOne in Aurora, IL and subsequent leasing with Oracle and Two Sigma.
• Overall rebound in enterprise users leasing wholesale, retail, hybrid, and cloud is expected in 2017.
• New projects in Quebec and Toronto will finally create MTDC assets in Canada. The decline in the Canadian Dollar has created parity for construction pricing to match some U.S. markets. However, rental rates remain significantly higher; Google, Amazon, Facebook, Softlayer and Microsoft have signed leases or are close.
• After a record 2015 for Mergers and Acquisitions (M&A) in the MTDC market, activity slowed in 2016, but transaction value remained high.
• Dearth of supply in the key MTDC markets (as noted in Fig. 2) There is only a 20% increase in turnkey space and space under construction despite these four markets accounting for more than 80% of 2016 leasing.
• As a result of large increases in data traffic, more subsea cable was laid during 2016 than the last five years combined.

Quarter 1

• GI Partners purchased a single tenant (TIAA-CREF) 92,800 sf data center in Broomfield, CO for $17.5 MM at a 6.3% cap rate.
• TierPoint completed the acquisition of Cosentry, which operates nine data centers throughout the Midwest.
• Carter Validus paid $8.5 MM for a 44,000 sf data center in Flint, MI, which is now 100% leased to Online Tech.
• Carter Validus acquired the 77,322 sf single tenant (SunGard) data center in Alpharetta, GA for $15.75 MM.
• The Chicago Mercantile Exchange Group sold its Aurora, IL 428,000 sf property (14.92 acres) to CyrusOne for $130 MM. The CME Group signed a 15-year 72,000 sf leaseback.
• Carter Validus purchased a 71,726 sf NNN property in Franklin, TN that is 100% leased to TierPoint for $19.4 MM.

Quarter 3

• Netrality acquired a four-property portfolio (two in St. Louis [490,456 sf] and two in Virginia) from Digital Realty Trust for $114.5 MM. Netrality sold its two, mostly vacant, Virginia properties (Herndon – 70,982 sf and Reston – 21,000 sf) to Lincoln Rackhouse for $8 MM. The two St. Louis properties sold at an 8 and 8.5% cap rate.
• Corporate Office Properties Trust (“COPT”) completed the formation of a joint venture with an affiliate of GI Partners. The venture acquired six of COPT’s existing single-tenant data center properties that contain a total of 962,000 sf. COPT realized $104 MM on the transaction.
• Digital Realty Trust purchased an 18.5 acre vacant property in Franklin Park, IL for $12.5 MM.
• EdgeConneX purchased a 132,000 sf vacant warehouse in Elk Grove Village, IL from Prologis for $22.8 MM.
• T5 purchased a 208,000 sf data center in Elk Grove Village, IL from Forsythe Technology.
• DFT acquired 46.7 acres of land in Hillsboro, OR for $11.2 MM.
• DFT acquired former 600,000 sf Toronto Star Plant in Vaughan, Ontario for $41.6 MM USD.
• ICONIQ took an equity position in two T5 Data Center projects: Plano, TX (315,000 sf) and Hillsboro, OR (110,000 sf). This $550 MM transaction was reported at a 6.8% capitalization rate.
• CyrusOne purchased a 23 acre parcel of land adjacent to the Aurora, IL property.

Big Red Wines We Really Enjoyed During 2016

• Altvs Cabernet Sauvignon 2010
• Casa Piena Cabernet Sauvignon 2012
• Peacock Cabernet Sauvignon 2010
• Clos Pegase Cabernet Sauvignon 2012
• Melanson Cabernet Sauvignon 2012
• Duckhorn Paraduxx Proprietary Napa Red Wine 2012
• John Galt Cabernet Sauvignon Napa Valley 2012