This is the first in a series of stories looking at the Northern Virginia data center market, including how data center development is impacting the region and where future growth may be focused. In part one, we examine the continuing influx of new development in the region. Part two will examine the challenges of growth, and emerging controversies surrounding data center development.
There are at least seven new players planning to enter the Northern Virginia data center market in the next several years. The influx of real estate developers in the region is tied to investor interest in providing infrastructure for hyperscale operators in blue-chip markets.
In the data center world, Northern Virginia is the home of the cloud, housing the largest concentration of server farms for Amazon Web Services, Google, Microsoft and Facebook. This demand is particularly strong near a strategic Internet intersection in Ashburn, Virginia that serves as a global crossroads for data traffic. As the cloud grows, the ability to add servers near Ashburn has become the table stakes for companies with ambitions in cloud computing.
As a result, data center users seem to have an endless appetite for deploying servers in Northern Virginia. But how long can this boom continue?
In our DCF 2022 forecast, one of our predictions was that data centers will confront growing community resistance. This trend has emerged in a big way in Northern Virginia over the last month, as local officials in both Loudoun and Prince William counties have hotly debated the role of data centers in the local economy, and where these facilities should and should not go. Land speculation has driven up real estate values in both counties, but some new data center projects are meeting sharp resistance from local residents.
New Developments Fuel the Cloud Boom
In assessing the future course of the data center development in Northern Virginia, it’s important to understand the region’s current footprint, as well as the influx of new players and capacity.
Northern Virginia is home to about 250 data centers and the largest cloud cluster for Amazon Web Services, as well as major operations for Meta, Google and Microsoft. Loudoun County is home to 26 million square feet of existing data center space, with at least 8 million square feet in the pipeline. Prince William County reported more than 5 million square feet in its last update, and with recent development is likely in the range of 8 to 10 million square feet of data centers.
One might wonder whether there is room for more new developers, as the region is already the most competitive data center market. But in recent years Northern Virginia has absorbed the debut of five large providers – Cloud HQ, Aligned, Iron Mountain, Vantage Data Centers and QTS Data Centers – who have all experienced strong leasing. The region is also home to most of the major multi-tenant data center developers, with Digital Realty, Equinix, CyrusOne and NTT Global Data Centers having the largest presence.
Despite the large number of companies already serving the market, vacancy rates are near all-time lows at 3.6 percent, with many projects pre-leased prior to delivery. Many of the new entrants are privately-held operators backed by investors with ready access to capital.
Here’s a look at the new players entering the Northern Virginia market and the projects they have in the pipeline.
Corscale Plans Large Campuses in Loudoun, Prince William: Corscale Data Centers is a new platform from the Patrinely Group and USAA Real Estate, and its first two projects will be in Northern Virginia. In Prince William County, Corscale has begun building Gainesville Crossing, a 2.3 million SF campus that will support 300 megawatts (MWs) of power capacity across five buildings. The company is also building in Loudoun County, where it plans a 72 MW data center at the Kincora development in Sterling.
Yondr Enters Northern Virginia Market, Plans 500 Megawatts of Data Centers: Yondr Group will make its U.S. debut in Northern Virginia, with plans to build 500 megawatts of data center capacity across Loudoun and Prince William counties. Yondr also says it will develop its own renewable energy projects to support its data center campuses, a move that will help its customers reduce their environmental impact.
AREP and Harrison Street Make $1 Billion Investment in Loudoun Data Centers: The former America Online campus in Ashburn will be converted into a large data center campus by its new owners, American Real Estate Partners (AREP) and Harrison Street, who are investing $1 billion to expand in Data Center Alley. The AREP/Harrison Street JV bought the campus last month and plans to redevelop it to create a 300-megawatt data center campus featuring four powered shells that can be customized for hyperscale tenants. AREP and HarrisonS treet are developing two other campuses in Loudoun County as well.
Prologis Gains Approval to Enter Northern Virginia Market: Logistics specialist Prologis and Skybox Data Centers are teaming on their second project, a 30-megawatt data center in Sterling. On Feb. 9 the Loudoun County Board of Supervisors approved the project, which will redevelop a 19-acre site in Sterling adjacent to several existing cloud data centers. Prologis and Skybox have previously teamed on a data center in Elk Grove Village in the Suburban Chicago market.
Landmark Dividend Buys Prime Property in Data Center Alley: Landmark Dividend has acquired approximately 1.2 million square feet of space within the Quantum Park development in Data Center Alley in Ashburn. The deal includes vacant land that supports data center development. Although it is a new player in Ashburn, Landmark Dividend is an experienced player in the data center market, with 35 data center acquisitions and more than $1 billion in digital infrastructure assets under management.
STACK Infrastructure Plans 1 Million SF Project: STACK Infrastructure will build a 216-megawatt data center in Ashburn, marking its first hyperscale development in Data Center Alley, where it operates a former AOL site that is enterprise focused. The new 80-acre campus will feature three buildings and offer nearly 1 million square feet of data center space. The large new Ashburn campus is part of an aggressive expansion in Northern Virginia by STACK, which is expanding its campus in Manassas in Prince William County, adding two 36-megawatt buildings.
TA Realty Enters Northern Virginia With Large Leesburg Project: TA Realty is another new entrants in the Northern Virginia data center market. It has unveiled plans for a 1.5 million square foot data center campus near Leesburg, which is emerging as a new data center hub in the Northern Virginia market. TA Realty plans to invest $1.8 billion to create a 300-megawatt campus featuring up to seven data center buildings with an on-site power substation.
Quantum Loophole Preps 2,100 Acre Data Center Campus in Maryland: Quantum Loophole has teamed with TPG Real Estate Partners to develop a 2,100-acre site in Adamstown, Maryland as a gigawatt-scale “data center city.” The venture seeks to extend the massive Northern Virginia data center market across the Potomac into Maryland. Quantum Loophole says it plans new approaches to backup power and network management, including a “battery farm” to offer large-scale energy storage, as well as a robotic cross-connect system to automate interconnections.
More Capacity as Delayed Projects Arrive
In addition to the new players, there are a number of data center campuses that have been in planning and development for three to four years, but may begin delivering capacity in the next year. These projects represent nearly 6 million SF of data center capacity in proximity to Data Center Alley.
CloudHQ Affiliate Prepares 4 Million SF Ashburn Project: In 2019 developer Vizsla Ventures received initial approvals for a project along Loudoun County Parkway. On Feb. 1, the Loudoun Board of Supervisors approval an expansion that will boost the size of the campus from 1.7 million SF to more than 4 million square feet of server farm space in prime real estate in Data Center Alley. shares an address with CloudHQ, an experienced data center developer which operates several large data centers in Ashburn.
EdgeCore Advances Sterling Campus: EdgeCore Internet Real Estate announced plans for a major campus in Sterling back in 2018, but has recently shifted into active development on its planned campus near Route 28, where it plans to build up to 144 megawatts of wholesale data center space. The company plans to build four data centers totaling 720,000 square feet of data center space.
Cologix Readies 1 Million SF Campus in Data Center Alley: Cologix bought land in a prime spot on Beaumeade Circle in 2018, and has shifted into development mode on its planned 1 million square foot campus. Cologix has been known for its focus on interconnection services in regional markets, and says the Ashburn project kicks off a “major shift” to building hyperscale edge data centers under the ScaleLogix brand.
Next: How much more data center space can the region support? And where are all these data centers going to go?