Data Center Boom Pushes Prince William Land to Nearly $1M an Acre

April 27, 2021
The economic value of data centers is boosting land values in Prince William County in Northern Virginia, with one transaction valuing a future data center property at more than $900,000 per acre.

The economic value of data centers is boosting land values in Prince William County in Northern Virginia amid strong demand for additional cloud computing capacity. Recent land deals show a sharp uptick in land values, with one transaction valuing a future data center property at more than $900,000 per acre.

The surge in real estate values in Prince William County reflects the expanding economic impact of data center growth in Northern Virginia, and follows a similar surge in land prices in recent years in Loudoun County, which hosts the largest concentration of data centers in the region. As development parcels have become harder to find in Loudoun, many data center developers have been shifting their focus to Prince William County, establishing a growing cloud cluster near Manassas.

Amazon Web Services recently acquired 58 acres in Gainesville for $52.4 million, or about $903,000 per acre, according to the Washington Business Journal. That’s a huge change from 2018, when Digital Realty was able to purchase a similar sized parcel for $266,000 an acre.

“It’s being driven by developers and speculators who are scooping up land as fast as they can because they know data centers are willing to pay just about any amount for it,” said Tim Leclerc, Deputy Finance Director for Prince William County, in a briefing for county supervisors last month.

Land Boom Spreads Beyond Ashburn

The land grab follows the pattern seen in Loudoun County, where data center properties have surged to more than $2.1 million an acre in Ashburn’s Data Center Alley, a key connectivity hub for the cloud computing sector. As land in Ashburn has become scarce and expensive, developers have turned to nearby locations that offer proximity to Ashburn, but more room to grow. This has boosted development in Prince William County, as well as areas further south in Loudoun County, where land deal have surged past $1 million an acre in the growing Dulles Cloud Corridor.

In Prince William, sales of vacant land within the county’s data center overlay district ranged from $441,000 per acre to $711,000 per acre in 2020, county officials said, helping boost assessments of vacant land in the county by nearly 15 percent. Assessments of vacant land in areas where data centers are allowed by-right rose 103 percent in 2020.

Northern Virginia is a strategic location for all cloud computing platforms, and is experiencing a huge burst in data center development due in part to the impact of the COVID-19 pandemic, which is accelerating cloud adoption as society shifts to digital platforms to support socially-distanced work, education and commerce. Google and Microsoft are adding cloud capacity in Northern Virginia, which is also home to  Amazon Web Services’ massive US-East region.

AWS has been building like crazy in Northern Virginia as it pursues a major expansion of its cloud computing infrastructure. Much of this new development has focused on sites in Prince William County, which has also seen new data center campuses for CloudHQIron Mountain, QTS Data Centers, with projects under development by Digital Realty and STACK Infrastructure, among others.

Cloud Architecture Shapes Campus Locations

Some of these projects have chosen Manassas because it is more affordable than Ashburn. But there is also a strategic reason to build additional campuses in Prince William, as cloud builders seek to create “availability zones” to provide failover options for clients. Major cloud service providers (CSPs) prefer several availability zones within a geographic region – close enough for low-latency data replication, but distant enough that a disaster would not affect both data centers.

The need to provision property for future growth – known as land banking – has impacted real estate values in data center clusters across Northern Virginia.

“We’ve seen land purchases on a per acre basis up in the Loudoun County area that are approaching $2 million,” said Leclerc. “We’ve seen them approaching $1 million here.”

The rising price of land may be good news for property owners, but it increases the cost of business for data center developers operating in Prince William County. The industry’s growing profile in Manassas is also of keen interest to the Board of Supervisors, which debated (and later dropped) a sharp increase in taxes on data center equipment in 2018, and then in 2020 passed a more modest 10-cent boost to $1.35 per $100 of assessed value.

In tonight’s meeting, Prince William Supervisors are scheduled to adopt a fiscal year 2022 budget that would further raise the rate on data center equipment to $1.50 per $100 of assessed value. Several supervisors have indicated interest in seeking additional future tax hikes on data centers, noting the significant tax revenue growth in Loudoun County from cloud expansions near Ashburn.

Some supervisors have compared this approach to “kicking a cash cow in the teeth,” and members of the economic development team have noted that comparisons to Loudoun are not necessarily an apples-to-apples equation, as the tax base in Loudoun County is supported by significantly higher personal income.  Census data indicates that in 2016 Loudoun County had the highest county median household income in the country at $134,464, compared to $97,986 in Prince William County (19th overall).

About the Author

Rich Miller

I write about the places where the Internet lives, telling the story of data centers and the people who build them. I founded Data Center Knowledge, the data center industry's leading news site. Now I'm exploring the future of cloud computing at Data Center Frontier.

Courtesy of Stream Data Centers

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