Prologis, Skybox Austin Data Center to Cost $500M+

By Tudor Scolca March 11, 2022

Incentives designed to attract tenants are a highlight of the development deal.

Dallas-based Skybox Datacenters is partnering for a second time with Prologis for the construction of a new data center. On Wednesday, the Pflugerville, Texas city council approved the economic development performance agreement with the LLC controlled by the partnership. The project could see up to $548 million in capital expenditures, including construction.

Skybox Austin I. Rendering courtesy of Skybox Datacenters

According to Skybox’s website, the facility will rise at the intersection of Meister and New Meister roads in Austin’s Silicon Hills. Developers plan to construct the 141,000-square-foot data center in two phases, the first slated for December 2022 completion.

This first phase is expected to create 200 to 300 jobs, a Pflugerville Community Development Corp. spokesperson confirmed for Commercial Property Executive. Upon completion, it is estimated that 10 full-time high-paying jobs will be created.

Skybox Austin I is planned to offer 30 megawatts with multiple options for security and power configurations. Two Oncor diverse power substations will support the data center. The facility will target enterprise and hyperscale clients, offering turn-key and powered shell solutions—which are in high demand as Austin’s digital infrastructure needs expand rapidly.

“The incentives program designed in partnership with the city of Pflugerville offers direct benefits to data center tenants, with no speculative risk from the community, in order to attract the best users to deploy their compute at Skybox Austin I,” Skybox CEO Rob Morris noted in a prepared statement.

Investment incentives in a high-demand market

As part of the development performance agreement, PCDC will provide an expansion grant, totaling just under $1.6 million. The incentive is capped at $225,000 annually, and Skybox must meet certain criteria to be eligible. Notably, it must construct the data center prior to Jan. 1, 2024, secure at least one tenant and certify a minimum of $50 million in investment.

In turn, the grant allows Skybox to offer a variety of incentives to its users, from rent reduction to tenant improvements and reimbursements. According to the agreement, Skybox owners and occupants intend to invest up to $548 million in the project—referring to “combined real property and future business personal property, combined between the building owner and future tenants, across all phases of the project,” the spokesperson told CPE.

Skybox Austin I will be the second data center constructed in partnership with Prologis. The logistics giant announced its partnership with Skybox in March last year, as reported by Data Center Frontier. The partnership’s first project was another 30-megawatt facility, in Chicago’s Elk Grove Village—completed in January—with potentially more to come across key U.S. markets.

Austin’s demand for digital infrastructure is likely to continue growing. Tesla and Oracle are among the big names to recently commit investments to Texas’ capital. Last year, CBRE reported Austin’s data center vacancy to be around 3 percent, one of the lowest among major U.S. markets.