Empty Philips Plant Has the Utility Systems Needed for a Data Hub
By Richard Metcalf
Journal Staff Reporter
The empty Philips Semiconductor plant along Interstate 25, obsolete for making computer chips, is likely to see new life as a data center.
About twice a week, companies are sending representatives to Albuquerque to check out the 502,000-square-foot building, said Drew Dolan of Titan Industrial Development. Most are interested in its suitability as a Web-connected computer hub.
"Albuquerque has been off the radar because there's no Fortune 500 companies based here," he said, adding that the metro area is attracting national attention.
Albuquerque-based Titan recently purchased the plant and its surrounding 60 acres and hired CB Richard Ellis to market the building.
A national commercial real estate company with an office in Albuquerque, CB Richard Ellis came up with the data center idea because of the Philips building's heavy-duty utility systems.
"It was a perfect fit," said Kevin Reid, a partner in Titan. "There's a lot of uses for that site, but the biggest advantage of the site is its infrastructure."
Data centers are a concentration of mainframe computer servers that require an abundance of reliable electricity and air conditioning. The Philips building has both.
In addition, data centers must be secure from natural and other disasters. They operate 24/7 and can't fail without dire consequences.
"We're not prone to any natural disaster," said Dan Newman of CB Richard Ellis' Albuquerque office. "We don't have earthquakes, hurricanes, flooding, tornadoes— you just keep adding up the risk mitigation."
Site search
CB Richard Ellis has an information technology group, based in Newport Beach, Calif., that works with companies looking for data center sites.
Virtually all major corporations have become so data-intensive that they need more than one data center. Internet companies, such as Microsoft and Yahoo, are constantly adding servers to handle increased demand for services.
As suitable locations became harder to find, CB's Albuquerque office was put on notice to look for potential sites here.
Late last year, as Titan was in the early stage of buying the Philips site, Jim Chynoweth of the local CB Richard Ellis office toured the building.
"I was getting educated on the infrastructure as we went through," he said. "The idea hit me— this would be perfect for a data center."
One of the keys is the supply of cheap power. According to The Wall Street Journal, electricity represents roughly 20 to 50 percent of the total cost of running a data center.
The Philips site has the infrastructure to provide 20 megawatts, which is enough electricity to supply about 13,000 households, said Susan Sponar, spokesperson for Public Service Company of New Mexico.
In addition, the site has the backup of two dedicated feeder lines from two PNM substation transformers, she said.
"Having electrical service from two separate sources is a fairly rare commodity in the city," Chynoweth said.
In addition, the electricity is relatively cheap.
PNM's average industrial rate was 4.76 cents per kilowatt-hour in February, 16 percent below the national average of 5.68 cents, Sponar said. One thousand kilowatts equal one megawatt.
The Philips building's heating and cooling systems, both of which have full backups, take up 40,000 square feet in the basement.
The cooling system has the capacity to air-condition 2.5 million square feet of standard office space— or one-fifth of all the leased offices in the metro— according to Kevin Yearout of Yearout Mechanical, which installed almost all of the system.
The Philips building's cooling system is also enough to handle 19 200-room hotels or 3.1 million square feet of retail space, he said.
Some of the equipment was installed during a multimillion-dollar upgrade of the plant in 2000, three years before it closed, said Bob Sanders, Philips' site manager.
"A lot of the newer pieces of equipment have barely run," he said.
Sanders has stayed behind to oversee the gutting of the building's former manufacturing space by Philips as required by the sales agreement. The process is expected to take several more months.
In the meantime, Lions Gate has a short-term lease to use 42,000 square feet in the plant to film a miniseries called "Hotel Man."
The plant, built in 1981, will get a total facelift as it shifts to a new use. All of the giant ductwork on the roof will disappear and windows will be added to the now bunkerlike exterior.
"You can't tell they're a data center— they look like office buildings," Reid said about data centers he's toured in other markets. "That's what will happen here."
If the data center idea fails for some reason, he said, the building could end up with several users such as a back-office financial center and call center.
The Philips building occupies 17 of the site's 60 acres. The remaining 43 acres are in the initial stages of being master-planned into a mixed-use "lifestyle" center, Reid said.
"This is a 10-year project," he said. "Private equity funding gives us the flexibility to take our time. We want to do a signature project."
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