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Big Data Has Growing Impact on Real Estate Profiles

Teradata Expanding San Diego Presence in HQ Relocation
June 8, 2018
Teradata Corp. currently has significant operations at this Rancho Bernardo, CA office building. The company recently announced plans to move its global headquarters from Dayton, OH to San Diego by year’s end.

Changes in its data storage and analytics business have spurred global services provider Teradata Corp. to boost its San Diego presence, with plans to relocate its headquarters there from Dayton, OH by year’s end. It’s the latest example of Big Data’s growing impacts on commercial real estate supply and demand.

According to Teradata’s June 4 filing with the Securities and Exchange Commission, company leaders decided to consolidate certain operations, including moving the global corporate headquarters by the end of 2018.

Teradata has not elaborated on its long-term real estate plans in San Diego, but it currently occupies a large portion of the office property at 17095 Via del Campo in the city’s Rancho Bernardo area, where it employs more than 1,000.

Teradata plans to provide separation benefits and other transition support to Dayton area workers affected by the office closure. Teradata employs approximately 300 people in Dayton, and some will be given opportunities to relocate to San Diego.

The company’s recent 8-K filing noted that the move is part of Teradata’s “ongoing comprehensive business transformation from a data warehouse company to a data analytics platform company,” and to better align its resources to pursue market opportunities.

“As the company evaluated its footprint and identified ways to make its decision-making, systems and processes more efficient, it determined that closing its Dayton office and locating headquarters in San Diego better positions Teradata for the long-term,” the filing said.

In an emailed statement, a Teradata spokesperson said San Diego has been “core to Teradata for over 20 years,” and the majority of its operations have been located there since the 1990s. “As the company continues to grow, officially transitioning to San Diego will allow Teradata to operate with more speed and agility to better serve its customers.”

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Teradata’s heightening of its local profile actually got underway last year, when it acquired San Diego-based StackIQ, a provider of technology that automates software development in the cloud and on-premise data centers. Financial terms of that transaction were not disclosed.

Teradata currently operates out of 20 U.S. offices in addition to numerous international locations including Mexico, Canada, South America, Europe and Asia. It presently has various divisions involved in data-driven segments such as analytics, storage and business consulting.

While data storage has increasingly been moving to cloud and other web-based technologies, commercial real estate experts have reported still-steady interest among investors in properties housing data centers.

In October, CBRE Group Inc. reported that investment in U.S. data centers reached record levels in the first half of 2017, totaling $18.2 billion, which was more than double the total investment for all of 2016.

Over the past five years, more than $45 billion in investment capital has flowed into the data-center sector nationwide, with more than 50 percent of that investment occurring since the start of 2016, said Pat Lynch, CBRE’s senior managing director of data center solutions.

“The robust adoption of rapidly evolving, data-intensive technology continues on a strong upward trajectory and will drive growth in the data center sector going forward,” Lynch said.

The recent upshots include continued new construction of data centers in places like Northern Virginia – the most active development market with more than 10 new projects in the pipeline as of mid-2017 – and other active data center hubs including Dallas, Chicago, Phoenix and California's Silicon Valley.

Also, the National Association of Real Estate Investment Trusts reported that REITs focused on data centers saw their stock prices rise on average by 25.2 percent in 2017, compared with gains of 17 percent for strictly industrial-focused funds, 3.4 percent for residential and 2.2 percent for office REITs. Retail REITs saw their prices drop by an average of 9.1 percent.

In its own recent data center outlook report, JLL noted that hybrid models for corporate data centers, which include mixing cloud and other outsourced, add-on services with physical on-premises systems, will become the norm in 2018 and beyond as the industry continues to mature.

Lou Hirsh, San Diego Market Reporter  CoStar Group   
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