Data centers booming in Illinois with addition of $2.5 billion site planned for former United Airlines headquarters

Construction has begun at the site of the former United Airlines headquarters in Mount Prospect, with recent demolition at the property clearing the way for the creation of a $2.5 billion data center campus expected to launch in 2024.

Officials with CloudHQ, a Washington, D.C.-based global data center provider that specializes in the design, development and operation of “hyperscale” data center facilities, said the 1.5 million-square-foot campus is expected to create 75 to 100 jobs for each of three planned buildings, including operations, maintenance and security positions.

The site, which is bordered by Dempster Street and Algonquin and Linneman roads, is anticipated to generate up to 3,000 construction jobs during construction of of the three buildings.

Hyperscale data centers typically house hundreds of thousands of computer servers in each building to meet the data storage needs of the world’s largest companies, officials said in a statement.

“Chicago has long been a digital infrastructure hub for our clients, who already have an existing presence in the market,” CloudHQ spokesman Brett Burnette said.

Burnette declined to name CloudHQ’s clients who are expected to store their servers at the site, citing “strict confidentiality agreements.” But he said CloudHQ’s clients represent “some of the largest internet providers in the world.”

In addition to the company’s global headquarters in Washington, D.C., and European headquarters in London, CloudHQ has offices in Frankfurt, Germany, and São Paulo, Brazil, and data center campuses in Northern Virginia.

The development is the 8th new data center project to launch in the past year in ComEd’s service territory, which covers northern Illinois, ComEd officials said in a statement. ComEd will build a new substation at the site to support CloudHQ’s operations.

“Companies like CloudHQ continue to look to northern Illinois and our service territory thanks to the unparalleled access to clean, affordable and reliable power that is essential for meeting the demands of today’s economy,” Gil C. Quinones, CEO of ComEd, said in a statement.

The first phase of the three-building project is anticipated to be completed in 2024, with an additional two buildings completed in the next three to five years based on demand, officials said.

Bill Cooney, Mount Prospect’s director of community development, said the village annexed the 50-acre site in unincorporated Cook County in 2017, about a decade after United Airlines began vacating the property and moving its employees to Chicago, eventually settling in Willis Tower.

“The village annexed the property so we could have more control over its future,” Cooney said.

Cooney said CloudHQ will receive a 6b tax incentive from Cook County for the project, which reduces the assessment level of the property from 25% to 10% for the first 10 years, 15% for year 11 and 20% in year 12.

After year 12, the assessment level returns to the full 25% for the benefitting property, Cooney said.

While local taxing districts will benefit from the increased property value, the Class 6b incentive adds up to a tax savings of roughly $2.5 million per year for the company once fully assessed, assuming the estimated $100 million value, Cooney said.

The company will generate more than $1 million a year to the village in electric utility tax and will donate $2 million to the Mount Prospect Park District for improvements to local parks, he said.

The Class 6b program is designed to encourage industrial development by offering a real estate tax incentive for the development of new industrial facilities, rehabilitation of existing industrial structures, and industrial reutilization of abandoned buildings, according to the Cook County Assessor’s Office.

According to ComEd, 2019 was a “turning point” for the data center industry in Illinois, following the passage of new state legislation offering a tax incentive to encourage tech giants and other firms to locate their data storage facilities in the state.

As part of a $45 billion capital construction plan, the incentive exempts qualifying data centers from state and local sales tax on equipment inside the facilities, such as cooling and heating equipment, servers and storage racks.

Since the passage of the Data Center Incentive Program, ComEd has seen 15 new data center projects, including six projects bringing more than $2 billion in local investment in 2021, the company said.

In ComEd’s service territory across northern Illinois alone, there are now more than 70 operating data centers, with six under construction and another 13 in early design or planning stages, the company said.

Real estate firm Cushman & Wakefield ranked Chicago fourth, along with Atlanta, in its 2022 list of top cities for data centers, trailing Silicon Valley, Singapore, and the number one ranked location, Northern Virginia. The report cited Chicago’s “sizeable incentives, low cost of land, plenty of development in the pipeline and lower power costs than most large data center markets.”

Burnette with CloudHQ said the data center campus will require few large trucks, and with only a few hundred employees at most, will not ramp up traffic in the neighborhood.

“We will try to blend in and go about our business, without being a disruption to the community,” Burnette said.

kcullotta@chicagotribune.com