Dave Sabey

Perhaps in the future, silver-legged secretaries will answer the phones, stainless-steel fingers will clack away at keyboards, and Manhattan’s workforce will have been completely supplanted by robotic counterparts who work faster, smarter, longer and cheaper than their human predecessors.

For now, though, most buildings are still stocked with actual flesh-and-blood employees who take long breaks, complain and sometimes confuse their assigned tasks with internet shopping.

The property at 375 Pearl Street, a towering skyscraper in Lower Manhattan at the foot of the Brooklyn Bridge, won’t be one of them. After buying the building out of foreclosure last year, its developer is taking a brave leap into the future.

The building is being overhauled. Soon it will be a giant data center, with an internal, artificial climate that is cool and dry, suited not for humans but machines. Power lines will serve up 40-megawatt loads for its fleet of servers.

“This will be the largest high-rise data center in the world,” Dave Sabey, the founder and chief executive of Sabey Corporation, which owns the building and is overseeing its conversion, told The Observer during a recent interview high in the 32-story tower. “This is the most complicated center of its kind in the world.”

As Manhattan has blossomed into an unlikely tech hub—drawing companies and institutions such as Google and Cornell’s planned applied-sciences school—375 Pearl Street is poised to be a key piece of infrastructure, essentially a 550-foot-tall supercomputer with vast numbers-crunching and storage capabilities, the most powerful data center of its kind.

But like any fable of humankind’s progress, the story of 375 Pearl Street’s development has a dark side. On September 22, The New York Times dropped a bomb on the data-farming industry—a Page One story on the sector’s profligate energy usage. The article painted a damning picture of data centers flagrantly burning through power to keep machines idling in case of a surge in online activity, zombie servers just gobbling electricity, and backup diesel generators keeping the whole thing running in case of a power blip while belching noxious fumes.

Mr. Sabey both defended the sector and distanced himself from his competitors. “They’re very good stewards,” he said. “The notion that any of us are not worried or don’t care about energy consumption, it’s the highest item. We are all over it.”

His company, he added, has located nearly half of its data facilities, nearly 2-million-square-feet’s worth, in Quincey, Washington, an area powered by hydroelectric dams on the nearby Columbia River.

“It has the lowest-cost compute cycles in the world, and it’s all green energy,” Mr. Sabey said.
The 375 Pearl Street data center will be linked to these operations out West, he noted. “It costs nothing to move photons through glass,” he said of the fiber lines that will transmit the data. In practice, however, experts say it’s unclear how much computing 375 Pearl Street would actually be able to offload.

What the Manhattan farm doesn’t outsource will be powered mainly from relatively clean sources: natural gas plants and the Indian Point nuclear facility produce most of the city’s electricity. Still, 375 Pearl will come online at a time of increased attention to energy consumption. In August, Mayor Bloomberg’s office released a benchmarking study that disclosed the energy use and efficiency of thousands of commercial buildings, and such disclosures will soon become annual. In this new era of transparency, buildings like 375 Pearl Street will stand out as conspicuous energy gluttons.

375 Pearl Street

“As resources become tighter and energy prices continue to rise, increased scrutiny could be directed at a building like 375 Pearl Street,” said Jared Rodriguez, an energy expert with the LeFrak organization, who worked on the city’s benchmarking study. “A building like that, because it consumes so much power, makes energy more expensive for everyone.”

Like so many contradictions in the fast-growing world of computing and technology, 375 Pearl Street makes both perfect sense and none at all. A colossus of a tower with an imposing concrete façade and sparse vertical lines of dark-tinted windows, the property hides in plain sight. Though it sits smack in the middle of the oft-photographed panorama of Lower Manhattan, its bland profile renders it all but invisible.

Most often, data centers are similarly faceless, but are typically located in the middle of nowhere—not on prime urban turf.

“Why do you need to be in Manhattan, where you have the world’s highest energy and real estate costs?” Barry Novick, a global data center manager for the financial company BlackRock, asked, echoing a sentiment voiced by several experts interviewed for this article who doubted the economics would add up.

Even a person with a role in the project acknowledged it was a gamble. Beneath the skepticism lies even a more fundamental question: Is New York’s tech boom really here to stay?

“There is definitely the sense that not all of the tech companies we see growing in the city are going to be around in a few years, and at some point there will be a shakeout,” said Andrew Roos, a landlord and top leasing broker who owns buildings with tech tenants and is familiar with analyzing their credit risk.

Even shoo-in tenants for 375 Pearl Street such as high-frequency trading firms, which depend on nanosecond connection speeds, have come under heavy fire from regulators in recent months, and some observers question the sector’s future.

For others, though, a facility like 375 Pearl Street seems long overdue.

Douglas Durst, one of the city’s most prominent real estate developers and landlords, planned to build a data center tower over a decade ago on a parcel of land he owns at 11th Avenue and 57th Street.

“We had the plans for it and had demolished the site; we spent $20 million designing and preparing to build it,” Mr. Durst said. “The idea was, you could have a cheaper data center in Wyoming, but if something went wrong in Wyoming, you were in big trouble.”

Mr. Durst was forced to abandon the project after 9/11, when suddenly companies became concerned about locating important infrastructure in a city many began to see as a vulnerable target of terrorism.

Those fears have largely subsided, and fortunately, 375 Pearl Street boasts an imposing bodyguard; the building sits at the rear of the massive police headquarters building, 1 Police Plaza.
Meanwhile, the notion that data has become so critical that its location in the city will be worth the added expense and risk has again come to outweigh the drawbacks. Even a skeptic like Mr. Novic said as much. “One of our core competencies at BlackRock is risk analytics,” he noted. “Those analytics are becoming more intense as the environment gets more sophisticated. It used to be acceptable to run a risk profile in 12 hours, whereas now clients want to know the risk profile of their portfolios in real time, minute by minute as the world’s markets are moving—12 hours is unacceptable. It adds up to a lot more compute cycles.”

A burly man in his 60s with thin gray hair, Mr. Sabey has ambitions for a star-studded roster of tenants and sees his facility at the vanguard of society’s push into the digital age. His first and only commitment so far is the New York Genome Center, a gene sequencing and research facility that will host a collaboration between Cornell, NYU, Columbia, Mt. Sinai and Cold Spring Harbor Laboratory, among others.

“They take your DNA and bust it into thousands of pieces,” Mr. Sabey said. “And they will hold up these sets of genes using our facilities and our vast storage and run algorithms to identify why one person gets a disease and the genetic basis for it. This is the kind of thing that could be a game-changer for medicine.”

It’s this sort of technological potential that most seems to animate Mr. Sabey, the notion that every situation and transaction generates an array of data points that can be collected, sorted and analyzed for human benefit (or at least the benefit of his clients). In this regard, Facebook and its much maligned habit of collecting our personal information are just a warm-up.

“By taking big data sets and teasing out data,” Mr. Sabey said, “you can have face recognition on the streets. There are sensors in this city as part of Homeland Security, and you could analyze that and get expressions and you could tease that and say, ‘Oops, we recognize that face or this behavior set.’

“We’re going to find ways to use data in ways we haven’t before,” he went on. “Your drugstore knows your wife is pregnant before you do, by her buying habits. There is a sufficient database that knows those things and could say ‘We better send her some of this stuff.’ Those are actionable things that can be monetized. There’s a gazillion things coming.”

When Mr. Sabey gets going, he brings an evangelical fervor to his sales pitch that his tenants seem to appreciate.

“Dave Sabey is passionate about our mission, and seems to view us as far more than just another customer,” Chris Dwan, a computer specialist for the Genome Center told us. “He’s a fascinating guy.”

If Mr. Sabey’s sunny demeanor wasn’t enough of a clue, it’s easy to tell he’s from out of town by the way he often refers to Manhattan simply as “the island.” He grew up in Washington State and attended the University of Washington on a football scholarship. When he met with The Observer, he walked with a cane and a heavy limp, the result of a recent hip replacement—a relic, he said, of his days playing on the defensive line.

“I look at those guys beating each other up, and I look at my hip and I think, God what was I thinking?”

Starting with modest real estate investments beginning in the 1970s, he eventually switched his focus to building and managing data centers, growing his firm, Sabey Corporation, into a $400 million company. He lives in Seattle and has a ranch in Montana where he tends prize cattle.

“We have the best Black Angus cattle in the world,” he said. He proudly states that he buys his genetically engineered alfalfa seed from the agricultural giant Monsanto.

“I believe in science,” Mr. Sabey explained.

Whatever the energy costs, then, he insists that his data center will be a net positive.

“Take the pulp and paper industry: it’s the third-largest polluter of air and water and the fifth-largest consumer of energy,” he noted. “Data permits us to get our print media on a Kindle or an iPad. The distribution of physical paper uses an incredible amount of energy compared to getting things online. Think of all the energy online shopping saves rather than everyone getting in their car and driving to the mall. I was raised in a family that didn’t have any money; we learned early on, if you left the light on, you were in trouble.”