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South Loop office building, redeveloped by 601W at a cost of $265 million just a few years ago, is now being considered for conversion into a data center. The decision comes as the developer faces challenges in refinancing the property and low demand for office space in downtown Chicago.

    The 683,000-square-foot building, known as Canal Station, was intended to provide modern, affordable office space near the Loop. However, despite its prime location, the building has struggled to attract tenants, with only one firm, R.M. Chin & Associates, signing a lease last year for 15,000 square feet.

    The conversion to a data center could offer 601W a more viable financial solution, given the growing demand for data storage and the advent of artificial intelligence. The building's location near critical infrastructure, including fiber-optic networks and a power substation, makes it an attractive candidate for this type of use.

    However, converting an office building into a data center would require significant investment in infrastructure, including reinforcing the building's structure to support heavy server equipment and ensuring access to reliable power sources. The nearby power substation may not have the capacity to meet the high energy demands of a data center, which could drive up costs.

    601W purchased the building for $68 million in 2020 and spent an additional $265 million redeveloping it, with the goal of creating modern, affordable office space. Despite its initial intentions, the developer is now exploring alternative uses for the property due to low demand and refinancing challenges.