Redevelopment of Distressed, Impaired & Underutilized Properties


‘Advanced’ data center looks to fill market void

Pennsylvania company hopes Transactionable brownfield site becomes data center gold

US Steel Fairless Works in full operation, 1970 (US National Archives and Records Administration)
Keystone NAP, a nascent co-location and managed IT services provider, has announced plans for what it calls the “first advanced data center” in the Northeastern US region. The year-old company is led by seasoned tech executive Peter B. Ritz, and expects the 180,000-sq ft data center to begin functional operation by early 2015.

Located on the former US Steel site in Fairless Hills, Pennsylvania, in close proximity to the Delaware River, Keystone NAP is banking on its location and access to steady power supplies as being an attraction to potential customers. The re-purposed industrial site has an onsite power plant, in addition to five other power feeds, including facilities operated by PECO, PSE&G, and Exelon.

Telcoms providers Sunesys and Comcast have been taped as providers of dedicated bandwidth to the facility’s customers using independent dual feeds that enter the new data center via opposite sides. Keystone NAP also noted that Sunesys will provide the means for customer access to carrier-neutral and redundant dark fiber routes to nearby major metropolitan areas, including New York, New Jersey, Philadelphia, Northern Virginia and Chicago. These fiber routes will also provide further access to networks managed by some of the nation’s largest service providers, among them Level 3, AT&T, and Verizon.

The new data canter is billed by Keystone NAP as being “built for customers that rely heavily on network-based applications, as well as those companies delivering cloud-based solutions.”

“We are bridging a crucial technology gap on the East Coast,” said the firm’s CEO, Peter Ritz, in a statement. “Across industries including healthcare, financial services, higher education, and more, there is a growing reliance on enterprise applications hosted in private, public, and hybrid clouds. Yet until now, there haven’t been solutions in the region to address the new demands those applications create.”

You’ve Got a Friend, In Pennsylvania
Locating the new data center on the former US Steel site, about 45 minutes northeast of center city Philadelphia, would seem to make economic sense. The proximity to cooling resources (Delaware River) and multiple power supplies is in addition to the far lower real estate prices of locating in Philadelphia or nearby New Jersey. As a recent report from real estate giant CBRE showed, these are among the most expensive markets to lease data center space in the US.

Keystone NAP is calling the facility a “Gateway to the Northeast”, with network connections that can serve potential clients along the entire densely populated Northeast Corridor that extends from Washington DC to Boston. (Boston being the most expensive city in the US to lease data center space, according to the same CBRE analysis.)

“We are seeing growing demand for data center space in the Northeast, and particularly in eastern Pennsylvania as an alternative to markets such as New York and New Jersey”, noted Kelly Morgan, research manager for data centers at the analyst firm 451 Research. “With its location outside of Philadelphia, as well as its combination of space, power and application management services, we expect that Keystone NAP will see strong demand for this new facility.”

Tax incentives are another added benefit of the former US Steel site. Now a part of the Keystone Industrial Port Complex, companies like Keystone NAP who locate to the site – much of which has undergone remediation efforts for contamination by the Environmental Protection Agency – can benefit from up to 14 years of tax exemptions. Via the state’s Keystone Opportunity Improvement Zone program, these exemptions and/or abatement may include vastly reduced or non-existent state and local tax bills during that period.