Data Center Development: Specialized Security, Communications, Cooling, and Power Needs; Service Agreements

Data centers have been developed (or existing buildings converted) so rapidly in recent years that they have emerged as a new real estate product type. There are physical features and operational issues unique to data centers that counsel and developer clients must address before proceeding with a data center project.

Data centers are more than just leased space. The owner must supply an uninterrupted source of power, climate control, including temperature and humidity controls, connectivity, wiring, build-out, and security. As such, they are significantly more expensive to build and maintain than standard offices or industrial facilities. Data centers house systems critical to the functioning of the businesses they serve, so counsel must address liability for any service interruptions and related insurance coverage.

The operating document for a company that occupies part of a data center is typically a service agreement or a license to use certain facilities within a designated space, rather than a lease. Data centers present unique challenges for underwriters looking to finance data center projects.

Listen as our authoritative panel discusses issues associated with the development, operation, and financing of data centers and outlines the necessities in both leases and service level agreements.