Leasing property for data centers in Illinois offers landowners a significant opportunity to engage with the expanding tech landscape while optimizing their property's value. Illinois boasts a strategic location with access to major transportation networks, making it an attractive hub for data center operations. As demand for digital services continues to surge, property owners can capitalize on this boom by providing essential infrastructure that supports technological advancements. In this resource, we will delve into the benefits of leasing your land for data center development and illustrate how LandGate's marketplace can efficiently connect you with potential data center tenants, allowing you to promote your property with ease.
Data Center Development in Illinois
Over the last decade, the data center market has been growing rapidly, undergoing a remarkable transformation. Data centers serve to be an essential part in maintaining internet growth and online service demand. They serve as specialized locations of vast computer networks and storage systems that work around the clock to process, store, and manage data.
The data center market in Illinois has shown promising growth over the last year, growing by over more than 20%. With large, hyperscale, projects coming into the area, Illinois is set to lead the front of sustainability, artificial intelligence and data storage in the future. The state hosts over 150 data centers and landowners in Illinois have experienced an increase in demand for their land for the expansion and creation of new data center projects. Many developers are looking for land to expand existing sites and build new projects across the state, contributing to the large market for data centers within Illinois. These opportunities provide benefits not only for the general economy and the job market, but also for landowners across the state.
LandGate is a marketplace that connects property owners of all types who want to sell or lease their land directly to developers seeking land for the development of data centers, while also providing useful property data to owners to help them make informed decisions through this process. Equipped with information about the value of their land, capitalization rates, and much more, LandGate provides landowners in Illinois with extensive property data at no cost to help navigate the process of leasing or selling their land for a data center. To learn more about your property's potential suitability for a Data center, get a free Property Report by with LandGate's map and check out the Data Center value index score:
Reasons to Lease or Sell your Land for Data Centers in Illinois
Illinois is an up-and-coming data center market, showing a recent boom across data center projects due to its reliable and large energy supply, state incentives, abundance of land, and its ideally located business hubs. The state is home to major players such as Digital Realty Trust, Equinix, DataBank, Microsoft, Google and Meta. While data centers are concentrated in Chicago, there has been a recent increase in Aurora, DeKalb, Elk Grove Village and Chamaign, where large areas of land have been purchased for new data centers.
While the buildable acreage for data centers in Illinois can vary according to project specifications, the typical size range for small facilities can start off with just a few acres while large-scale projects cover an average of 100-150 acres. Larger data centers in Illinois can exceed 200 to 300 acres. A medium-sized data center will typically range between 50-90 acres of land, and is the most popular size of property that developers demand in Illinois. Larger data centers have seen an overall increase in demand over the last year.
Along with the financial gain from either leasing or selling their property for data centers, landowners in Illinois should be aware of the benefits that developing a data center has on the regional and state economy. The Illinois data center market has exceeded over 1500 MW of power over the last few years, with the help of multiple hyperscale projects from major players all over the region. For example, T5’s upcoming planned project in Chicago will add 480 MWs of power to the Illinois data center market and will span over 160 acres. Opportunities such as these also have a large impact on the job market. For example, Meta’s proposed $1 billion DeKalb data center created 1200 jobs in construction and promised to place 100 employees in full time positions upon completion. With each data center creating hundreds of jobs for local contractors, suppliers, on-site and maintenance workers, they also generate full-time job opportunities across colocation facilities and hyperscale projects.
Additionally, Illinois is moving towards advanced technological methodologies and is far ahead of other data center markets in incorporating artificial intelligence, machine learning, and edge computing methods within their work spaces to improve overall efficiency and performance. Latency reduction efforts, like reducing data file size for smoother data transmission, have increased with the advancement of technology within data centers, allowing Illinois to remain at the forefront of technological innovation.
Moreover, data center projects in Illinois are incorporating environmental sustainability methods to increase energy and productive efficiency, making them low-traffic sites with reduced infrastructural strain, which preserves the nature of rural land. Many companies have included initiatives such as advanced cooling techniques such as liquid cooling of HVAC. Advanced cooling systems have reduced the overall amount of energy required to carry out operations within centers by up to 40%. Some centers have pursued Leadership in Energy and Environmental Design certifications which ensure that buildings meet environmental performance standards and that projects adopt energy efficient practices.
Overall, Illinois offers large growth opportunities to large market players and investors, however, the state experiences a multitude of extreme weather conditions during the winter. Many data centers have taken on natural disaster and risk mitigation methods. For example, Digital Realty’s Elk Grove Village data center uses LED lighting and AI systems to maximize space efficiency and outside air systems to reduce energy consumption in cooling methods. Similar systems create a reliable stream of income for landowners that lease their land for data centers regardless of the risk of natural disasters and extreme climate conditions.
Data Center Considerations for Property Owners in Illinois
By leasing or selling property in Illinois for the development of data centers, landowners are able to contribute to the infrastructure that keeps the digital world and the economy running smoothly. Property owners of all types, ranging from individuals to corporations and governments, are not only a critical component in the digital network that supports the technology provided by data centers we need to operate every day, but also a key component to regional and state economic development.
When selling or leasing land in Illinois for data centers, landowners should keep the typical size requirements in mind along with several other important considerations. Zoning and regulatory laws will impact the amount of land eligible for development. The property’s proximity to power and fiber optic sources will also affect a property’s suitability for data center development.
Illinois offers generous tax incentives for data center development that results in large traction into the market. With overall lowered costs of projects such as the Data Center Investment Program, established in 2019, upcoming centers have state exemptions from local taxes for up to 20 years on data center equipment and building materials. Additionally, some municipalities offer property tax abatements to reduce overall operating costs and increase renewable energy use. There are multiple energy policy goals that incentivize data center developers to use alternative energy methods to power their centers (IPA). Long-term tax benefits also allow data center investors to enter into long-term lease agreements with landowners to construct data centers on their property, which provides a secure and consistent source of income for landowners.
What is the Process of Leasing Property in Illinois for Data Centers?
There are 8 main steps involved in leasing property in Illinois for data center development:
Step 1: Land Qualification
The first step for landowners in Illinois curious about leasing or selling their land for data center development is to understand if their land is suitable for a data center. Factors such as location, buildable acreage, zoning, topography, proximity to energy and utilities, and environmental considerations like flood zones and wetlands all impact a property’s viability for a data center.
Curious if your land in Illinois could qualify for a data center lease? LandGate provides data center value index scores for every property in the U.S. within our free property reports. On a scale of 0-100, the data center value index score will let you know how suitable your property could be for data center development. Get a free property report by finding your parcel on LandGate’s map:
Institutional and government property owners in Illinois also have the opportunity to lease their properties for data center development to generate revenue and contribute to economic growth. To learn which of your agency’s specific sites are most suitable for data center development, book a free consultation call with the government & corporate team at LandGate below:
Step 2: Market Your Property for Lease or for Sale for a Data Center
Listing your property in Illinois for lease or for sale for the construction of a data center on LandGate’s marketplace is the best way to market and get the most value from your property. By listing on LandGate’s marketplace, you are presenting your property to various competitive companies actively searching for properties in Illinois to lease or buy for data center development.
If you’re unsure if your property could be suitable for a data center, our team recommends creating a listing anyway- listing is completely free with no obligations to accept any offers, so you never know what kind of offers you may receive.
Step 3: Receive Lease Offers
Once your listing is live on LandGate’s marketplace, any interested developers will reach out to you directly with offers using the contact information provided when you registered for your LandGate account.
Step 4: Lease Negotiation
Negotiating the ground lease offer is the first step you will take after receiving an offer. LandGate is unable to provide legal advice or assist with conducting due diligence on any offers that you receive, but we can refer you to a licensed expert that can help. These professionals, such as commercial real estate brokers, attorneys, and engineers, can assist you in ensuring that you are securing a good deal.
Always remember that lease agreements are completely negotiable. You can negotiate things like the value of the lease payments, the length of the lease, and the percentage of the escalator. Typically, ground leases for data centers range from 75-99 years, and generally provide escalating base rents, percentage rent arrangements, and outline responsibilities for maintenance and utilities.
Step 5: Lease Option Agreement
After negotiations, developers need to retrieve data center option agreements. Typically, this follows a check by the developer, ensuring that the land meets their needs and in the case of tax exemptions of subsidiaries, meets all necessary government requirements. It is essential for both parties involved in the agreement to assess possible engineering and land factors, to ensure the feasibility of the project and ensure that it receives all necessary approvals to begin. Oftentimes, data center proposals will be pitched to the county or state government.
Why can’t I get a lease agreement directly?
The process of developing any large data center begins with the developer optioning the land, also known as ‘site control,’ typically through a Ground Lease. Once thorough land evaluation has taken place, utility application is necessary. This means that the data center project will need further due diligence to ensure that sites have required proximity to a power source (renewable or a power substation), access to fiber optic cables, and that necessary easements are in place.
Where can a landowner get more information about the lease?
You can find out if your property could be suitable for a data center by getting a free property report from LandGate. LandGate provides data center value index scores for every property in the U.S., which will evaluate your property on a scale of 0-100, letting you know how suitable your property could be for a data center. Get a free property report by finding your parcel on LandGate’s map:
Step 6: Lease Agreement
Once site control is confirmed, the project is then moved to a ‘planned’ phase. The option agreement now becomes an official lease agreement, and the landowner begins to receive lease payments from the data center developer. The specific amount of these lease payments depends on what is negotiated in the lease.
Step 7: Data Center Construction
Lease payments for data centers are phased as projects progress. Typically, the lease payments start as a small amount during the option period and increase during the construction phase of the data center, with payments reaching their peak upon completion of the data center.
Depending on the size of the project, constructing a data center can take anywhere from 18 to 40 months before the data center reaches full operation. Smaller projects will take a substantially less amount of time to complete.
Step 8: Active Data Center
After construction is completed and the data center is fully operational, the lease enters the ‘production’ phase, which indicates that the land is now responsible for data storage and transmission through the data center. This period will last throughout the remainder of the lease.
Opmerkingen