New Downtown Data Center to Feature Ground-Floor Retail

A new hybrid development coming to the lower Broadway Street corridor is set to throw some hardware into the mix of downtown’s software scene.

H5 Data Centers announced last week it purchased properties at 100 Taylor St. and 323 Broadway St. from local real estate developer David Adelman, who will lease the first floor of the Taylor Street building as retail space. H5 will lease its space to store computer servers. The downtown data center is a rarity with many of the area’s facilities located on the far western edges of San Antonio.

“It’s been on our radar for some time,” David Dunn, chief operating officer of H5, said of the property. “We were able to work out an arrangement with the seller, David Adelman, and his company. He’s going to lease a portion of the building back on a long-term basis and pursue more retail strategies.”

Dunn said San Antonio is an emerging data center market.

“There have been several larger enterprise data center deployments in the area – the big daddy of them being Microsoft,” he said.

Microsoft Corp. bought a 34-acre, $80 million data center on the city’s far West Side in November 2017, according to the San Antonio Express-News. The Microsoft project is one of three “registered qualifying” data center projects being built in Texas, according to the Texas Comptroller of Public Accounts. Data centers that span at least 100,000 square feet, reach a certain level of capital investment, and create a set number of jobs can qualify for exemption from state sales and use tax. There are four such data centers in San Antonio.

The H5 Data Center’s purchase, however, comprises 85,000 square feet and does not meet that bar.

The company now owns 13 data centers throughout the country. San Antonio was a geographically favorable location for H5’s expansion because it is rarely hit by natural disasters and an underserved market, Dunn added.

Known as a carrier hotel, the facility allows for physical interconnection between different carrier networks, such as web hosting services and telecommunications companies, Dunn said. San Antonio’s relatively central location in Texas makes it an ideal nexus connecting various parts of the state and into Mexico, Dunn said.

Adelman’s AREA Real Estate firm will redevelop the ground floor at 100 Taylor St., but not until the Broadway Street Corridor improvements are completed as part of the 2017 bond program, Adelman said.

Those upgrades, including curbs, sidewalks, bike lanes, lighting, drainage, and traffic improvements, will total about $42 million and should begin in May, with completion scheduled for June 2022.

“[Broadway] is a great street, and [the bond project] will bring it back to life,” Adelman said, adding that building wider sidewalks will encourage more pedestrian activity.

His Taylor Street project will join other developments planned in the corridor, such as the NRP Group’s Broadway Jones Apartments, a five-story, 283-residence apartment building featuring retail stores and restaurants. Hixon Properties also is bringing a six-story office tower with ground-level retail to the Broadway and 8th Street intersection.