Michael Alter sells land to T5 Data Centers for $29M after office pain

Data center development interests are propping up land prices in the Chicago-area, and real estate mogul Michael Alter is the latest to benefit.

An affiliate of his firm the Alter Group, based in Wilmette, cashed out with a $29.4 million sale of vacant land in Grayslake to a venture of T5 Data Centers, which is planning to develop multiple data center buildings across 160 acres in the northern suburb, public records show.

T5’s first building, with capacity for up to 60 megawatts of data storage, is expected to be completed by 2027, while the entire project, once built out, could house up to 480 megawatts.

Alter Group sold four parcels totaling more than 134 acres, while T5 struck an option to purchase another 45 acres from the company at a later date, according to Lake County records. It’s unclear how much more money T5 would have to fork over to exercise its option and buy the remaining property.

“The Chicago land market continues to be one of the premier markets to build and operate data centers because of the attractive tax incentives, labor pool, established connectivity and power availability,” T5’s David Horowitz said in a statement.

The land is adjacent to an already developed Medline warehouse, and a road named for Alter’s late father, William Alter Drive. William Alter was the founder of Alter Group and got his start in real estate by selling land to suburban homebuilders in the Chicago area. He died at 78 in 2008, by which time the Alter Group was one of the largest developers in the nation. Alter Group didn’t return a request for comment.

The big price for the vacant land sale is one of several high-dollar deals for land that data center developers have closed in recent months in Chicagoland. In Elk Grove Village, Texas-based Aligned Data Centers last year spent $78 million to buy three suburban office buildings it plans to redevelop into two 520,000-square-foot data center structures, a project estimated to cost $285 million.

Alter’s move to sell the Grayslake land — which appears to have been owned by the Alter family for many years — in a deal with T5 could help ease the pain of a recent loss the firm took on a high-profile Chicago real estate bet. The firm this year sold the office portion of the 17-story building at 20 West Kinzie Street to a venture of Bixby Bridge Capital and Franklin Partners for $20 million, far less than the $60 million Alter had borrowed against the property from Bank of America in 2019.

Almost 80 percent of the 258,000-square-foot office space was vacant at the time of the sale, but it used to be leased to Google, and then WeWork took over much of the space but defaulted on its lease. Alter is trying to salvage as much revenue as possible out of the WeWork deal as the coworking firm moves through a bankruptcy reorganization. The landlord claimed it’s owed $11.9 million for a lease termination fee in WeWork’s bankruptcy case.

In addition to his real estate business, Michael Alter also owns the WNBA’s Chicago Sky professional women’s basketball team.

T5 also operates data centers in Elk Grove Village and Northlake within the Chicago area.

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