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Enclave Acquires Waltham Facility

Carrier Hotels Staff Posted Mar 23, 2004

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The first time Gabe Cole and his team of executives considered buying 115 Second Avenue in Waltham, Mass., it was the spring of 2000, the high-water mark of the Internet bubble. Cole and his colleagues from CO Space didn't get the deal.

But they didn't forget about the property, either. Cole is now the CEO of Enclave Properties, which Tuesday announced that it had acquired the 70,000 foot Waltham data center. Enclave is backed by the principals of New England Development and includes four former executives of CO Space.

It bought the 115 Second Avenue site from Telecom Realty/CTC Communications, which outbid CO Space in 2000 and then invested $33 million outfitting the building as a data center. Enclave plans to divide the facility into multiple, private data center suites ranging from 200 to 10,000 square feet, and market them to technology firms requiring secure space for their IT operations.

"We're targeting Global 1000 companies, government entities, hospitals and institutions," said Cole. "In some cases, we're working with service providers who may bring one or more clients into the facility.

"We are developing multi-tenant data centers that provide all of the cost benefits of a shared data center, but which give customers 100 percent control of their own private data center suite," said Cole. "New England Development saw a unique opportunity to apply a real estate-based model to the data center marketplace."

"We believe that there is tremendous value in owning the underlying real estate and being able to grant customers leases on their data center suites that run directly to the property and which can protect them from the failure of third-party operators," said Gregory Sullivan, Executive Vice President of Corporate Development at New England Development.

At CO Space, Cole engineered an exit strategy with fortunate timing, selling the company and its four data centers to Internap in May 2000 for $244 million. Enclave Properties has been patient in choosing the right opportunity to re-enter the data center business, making the Waltham deal after months of studying the marketplace.

"We were looking for some fundamental bottoming in the industry," said Cole. "We were looking for some level of capital spending to return among our target customers. We like what we see when we look at the activity for Cisco and HP. People are starting to buy boxes again, and those boxes will need a place to live."

Cole said it also took some time for the price of some of the available facilities to align with his sense of the market value. "There are any number of surplus data centers, and it took people a while to come to terms with the fact that these buildings were never going to sell for anywhere near what it cost to build them," said Cole."What we wound up with is a classic real estate opportunity where we could acquire a quality property for 15 to 20 percent of the construction cost."

Enclave, which also includes industry vets Donato DeNovellis, Steven Gunderson and Catherine Davies, said it is examining other data center acquisitions as well. "We see a lot of opportunity," said Cole. "Our ideal is really to grow it in the Northeast first."

Founded in 1978, New England Development is a premier real estate development and management company in the Northeast.