How can some landlords receive rents of $600 or more a square foot?  A recent article in the New York Times reveals that the answer is by leasing to data centers.  According to the May 13, 2013 article entitled “Landlords Double as Energy Brokers”, businesses in New Jersey are now paying $600 or more a square foot to lease data centers and these rents are four (4) times that being paid for trophy high-rises on Madison, Park and Fifth Avenues in Manhattan.

Data centers have become crucial to many businesses that need remote computer storage, electrical power and ultrafast fiber optic links, including financial traders, bankers and physicians and the New York metro market now has the most rentable square footage in the nation.  Rents are particularly high in northern New Jersey due to the proximity to the New York Stock Exchange and other markets.

Before you decide to rent warehouse or commercial space to a data center, careful thought should be put into the provisions of your lease.  For example, using a form lease simply won’t do and could significantly hurt your ability to enforce your rights with this type of tenant.  And data centers have construction, operation and other requirements that need to be evaluated and addressed.

This is just one way that landlords can maximize rents.  Evaluating data center and other leases requires careful review on an individual basis.  It behooves landlords to speak with experienced counsel prior to negotiating or drafting leases and other documents.