One of Washington newest state agencies, the Consolidated Technology Services, has hired a broker to try leasing out excess capacity in the vastly overbuilt State Data Center it manages.
CTS director Rob St. John said last week that the state needs just one of four halls in the center, two of which have been built out. The hope is that a paying tenant is willing to finish the upgrades in one of two main data halls the state has fully wired and partially outfitted.
“The way we’re hoping it would work – the best case scenario for us – is we would not have to make any additional investment in Hall 2,” St. John said. “Actually what the market supports and what we can get in there, time will tell.’’
A state-funded report by Excipio Consulting LLC said more than 11/2 years ago that the 50,000 square feet of data center space in the Department of Enterprise Services’ complex was perhaps 10 times what the state needed.
Seattle-based broker Jones Lang LaSalle first listed about 30,000 square feet of data hall space six weeks ago. The move is in line with a business plan the state has developed under pressure from Democratic state Rep. Reuven Carlyle of Seattle, who has been a frequent critic of the project, to earn something for the taxpayer investment in the building.
“In the short six weeks we’re definitely seeing interest from Seattle- and Bellevue-headquartered high-tech firms,” senior vice president Conan Lee of Jones Lang LaSalle said Friday. Lee, who said he specializes in the marketing of excess data-center space, mentioned gaming companies and software developers in particular among the potential bidders.
Jones Lang LaSalle is working on a commission basis which means it is incurring costs without payment until Lee succeeds. He added that he would not have taken on the project if he thought he could not find a good-paying tenant.
The firm has a website touting features of the building, and Lee said the structure is a first-class facility and “the highest quality data center in the state.”
Although many data centers are in Eastern Washington, he said Western Washington is a “compelling” location and that the state building has seismic safeguards that neutralize the major criticism of such projects on the west side of the state.
Also giving him confidence, he said, is that more companies are expanding or moving into the regional market than leaving it.
CTS is a new state agency formed last year in a major government restructuring – proposed by Gov. Chris Gregoire – that put functions of five state agencies into three. The result was two new agencies, CTS and the Department of Enterprise Services, that now are the main users of the $255 million office-and-data-center complex on Jefferson Street, a few blocks east of the state Capitol in Olympia.
That structure, which the state is buying from a private developer on a long-term lease-to-own contract, includes some 260,000 square feet of office space. DES is a mega-agency that provides back-office services such as accounting, payroll and personnel services to other agencies – as well as real-estate, landlord, maintenance, printing and other functions.
Of the four halls in the Data Center, two were always intended for future expansion and have not been built out.
State lawmakers say they are hopeful the state can cash in on its investment.
Republican Rep. Gary Alexander of Thurston County has said he regards the hiring of a broker as “a good move. There is no doubt they overbuilt the facility. Now the question is: What are you going to do with all of that unused space?”
He said the leasing may be challenging given advances in cloud computing and virtualization – which lets few computers do the work once done by many – that are reducing the need for data storage space at a place like the State Data Center.
The state is moving ahead with its use of one data hall, but St. John said it is backing off its rush to consolidate more than 40 data centers spread out in agencies across Thurston County.
bshannon@theolympian.com 360-753-1688 www.theolympian.com/politicsblog @BradShannon2
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