Northern Virginia Data Center Construction Hits New Heights in 2018

Dec. 3, 2018
The past year has been an extremely active period for data center construction, as well as real estate transactions to lock down development sites for future data center campuses. There is currently 58MW of data center capacity under construction in Northern Virginia. But the larger story is the long-term outlook for dynamic growth in the region’s data center industry. A new Data Center Frontier series provides overview of the major hubs of data center activity in Northern Virginia.

We continue our series of stories on the leading geographic markets for data center space. Data Center Frontier is partnering with datacenterHawk to provide in-depth market reports on each city we profile. This time, we revisit the Northern Virginia Data Center Market, the home of the cloud.  The third post in our series provides a deep dive into Northern Virginia data center construction trends for 2018 and beyond. 

Download the full report.

The past year has been an extremely active period for data center construction, as well as real estate transactions to lock down development sites for future data center campuses.

There is currently 58MW of data center capacity under construction in Northern Virginia. But the larger story is the long-term outlook for dynamic growth in the region’s data center industry. At the close of 2Q 2018, developers and service providers had announced plans for a whopping 1,097MW and nearly 8 million square feet of data center projects. Several subsequent announcements of new market entrants will further boost that total.

This growth is driven by an insatiable demand for real-time news, sports, music and video—an ocean of data that will soon extend to virtual reality, selfdriving cars and the Internet of Things (IoT). The major players in Northern Virginia are seeking room for expansion, while new players are buying land to join the action in Ashburn.

That immense future supply reflects long-term planning by both current providers and new players. Here’s an overview of the major hubs of data center activity in Northern Virginia:

Loudoun County

Data Center Alley in Ashburn has long been the center of gravity for cloud computing in Loudoun County. That’s still the case, but there’s a limited supply of land available where developers can build data centers. As demand continues unabated, and new projects gobble up prime sites, land is getting scarcer and more expensive. This trend is leading to denser and taller data center campuses, but is also boosting development in other parts of Loudoun County.

Over time, land valuations and the economics of cloud demand will likely prompt many office and industrial properties to convert to data center usage as leases expire. This is a pattern seen in other markets with scarce open land, especially Santa Clara in Silicon Valley.

In Northern Virginia, the key metric in data center location is “distance to Equinix”—meaning the interconnection hub just off Loudoun County Parkway, where more than 200 networks exchange traffic.

There’s no property closer to Equinix than the campus of the Christian Fellowship Church (CFC) on Beaumeade Circle, which recently sold for $38 million, or about $1.7 million per acre. The buyer was Cologix, which has filed plans to build nearly 1 million square feet of data center space on the site. Cologix will build in phases, eventually either repurposing or demolishing the building once the church has completed its relocation.

A similar transaction occurred just down the street, where Chirisa Tech Centers just acquired a property for about $1.4 million per acre. The business park surrounding the main Equinix campus in Ashburn includes many office and industrial buildings scattered among the data centers. Over time, land valuations and the economics of cloud demand will likely prompt many of these properties to convert to data center usage as leases expire. This is a pattern seen in other markets with scarce open land, especially Santa Clara in Silicon Valley.

There is currently 58MW of data center capacity under construction in Northern Virginia. (Photo: RagingWire Data Centers)

Here’s a look at activity around Loudoun County:

  • Digital Realty operates one fully-leased campus and is building an additional 2 million SF of capacity on a new campus off Loudoun County Parkway. The existing Digital Ashburn campus spans nearly 1.5 million square feet of space in nine buildings to support tenants like Amazon Web Services, LinkedIn and major financial service providers. Digital Realty has also acquired 424 acres of land next to Dulles Airport from the Metropolitan Washington Airports Authority for $237 million, laying the groundwork for another massive campus.
  • CloudHQ commenced work on its huge Loudoun campus development in Ashburn. The 72MW facility is split into two phases.
  • Equinix is breaking ground on the first building on its 34.5-acre site, which it purchased in 2017. Of their three primary Loudoun County campuses, the first campus is complete, and they currently have one building, DC12, delivered on their second campus. Five data center facilities slated for each of the two sites will be developed in tandem.
  • RagingWire continues development on its new 78-acre campus in the heart of Ashburn’s “Data Center Alley.” At full buildout, the new campus can support 1.5 million SF of space and 176MW of capacity. The first building, VA3, offers 245,000 SF and 16MW of capacity and is fully leased. RagingWire has begun construction on the next two buildings, VA4 and VA5. Each of those two-story data centers will offer 32MW of capacity and 250,000 SF of space. RagingWire operates two other data centers in Ashburn (VA1 and VA2) with a combined total of 290,000 SF of space and 28.4MW of power.

The data center industry has been growing rapidly in Prince William County, as developers look beyond Loudoun County in search of larger and more affordable parcels of land.

  • Amazon Web Services is working with multiple developers to support the growth of its massive US-East cloud computing region in Northern Virginia. AWS has worked with Corporate Office Properties Trust (COPT) in developing powered shells in the region. In May COPT reported leasing two 216,000 SF data center shells in Northern Virginia, which are likely for AWS. COPT is also reportedly acquiring 78 acres at Waterside in Sterling off Old Ox Road, with plans to build multiple data centers for AWS. In March, Northstar Commercial Partners announced plans to build two data centers that are pre-leased to a “Fortune 20 customer” (likely Amazon) on land it purchased at the junction of Route 28 and Route 606 in Sterling. Media reports also connect AWS with a three-building data center campus being developed by Oppidan Partners along Route 50 in Chantilly.
  • CyrusOne is continuing construction on the next phase of its massive Sterling V data center campus in Sterling. In July, CyrusOne said it had purchased land for a new data center campus in Sterling, which includes an existing powered shell building, which will allow the company to complete the first phase of a new data center by early 2019. The company is reportedly seeking additional sites for expansion in Northern Virginia.
  • QTS Data Centers opened the first phase of its new Ashburn facility in August with an anchor tenant in place. The building, which is the first three-story data center in Ashburn, supports 32MW of commissioned capacity. The 24-acre site off Broderick Avenue will support a second, 16MW data center. QTS owns 28 acres of land on a nearby parcel, where QTS plans to build three buildings and up to 100MW of capacity.

Data center industry growth is driven by an insatiable demand for real-time news, sports, music and video—an ocean of data that will soon extend to virtual reality, self-driving cars and the Internet of Things (IoT).

  • EdgeCore Internet Real Estate recently unveiled plans to enter the Northern Virginia market with a four-building 144-acre campus in Sterling near the Dulles Town Center mall.
  • Aligned Energy plans to create a 180MW data center campus in Ashburn on a historic telecom property at Quantum Park, the former UUNet site that was a key connectivity hub in the early days of the Internet.
  • Vantage Data Centers is well along in construction on its first two buildings at its new Ashburn campus, where it plans to invest $1 billion to create 108MW of capacity.
  • Sabey Data Centers has begun construction on the second data center building at its Intergate. Ashburn campus, a 260,000 SF facility that can support up to 35MW of capacity.
  • Compass Datacenters has received approval for their 750,000 SF Northern Virginia campus in 1Q 2018 after a lengthy permitting process. The company is now beginning construction on the 104-acre site and intends to build 60MW of commissioned power.
  • Infomart Data Centers, with new ownership in place, officially opened its Ashburn data center in May, when it completed commissioning of the first data suite within a former AOL Data Center in Ashburn. The site is optimized for customers focused on security and compliance mandates.
  • SDC Capital Partners, an affiliate of Sentinel Data Centers, has purchased the 280-acre Washington Dulles Gateway site in Ashburn, which offers approximately 140 acres of buildable land for future data center development. Sentinel also owns 65 acres of land next to the original AOL campus near Route 28, where it has approvals to build a data center campus with up to 2.85 million SF of data centers. Development on the site began in 2Q 2018 after securing a 40MW pre-lease.
  • Google has two data center construction projects underway. It has bought a 91-acre property in Arcola, just West of Dulles Airport. Google also has a data center site under development at the Stonewall Business Park near Leesburg.
  • In addition to being a major user of wholesale space in Data Center Alley, Microsoft appears to be ready to build its own campus in Northern Virginia. In mid-September, the company paid $73 million to buy 332 acres of property at the Compass Creek business park in Leesburg.

Prince William County

Prince William County is home to 31 data center projects and 3.5 million square feet of data center space, according to the county Department of Economic Development. The data center industry has been growing rapidly in Prince William County, as developers look beyond Loudoun County in search of larger and more affordable parcels of land. The Manassas area saw several major new deployments in 2017, and several developers are buying land for future campuses.

An aerial view of QTS Data Centers’ new facility in Ashburn, Virginia. (Photo: QTS)

Activity is accelerating despite a recent political controversy in Prince William County that made the data center industry a central focus of the budget process. Board of Supervisors Chairman Corey Stewart sought to increase the personal property tax rate for computer equipment and peripherals from $1.25 per $100 to $3.70 and said the move could raise an additional $20 million and allow the county to decrease the property tax rate. The measure failed to gain support from other supervisors, failing by a 6-2 vote in April.

The data center industry has been growing rapidly in Prince William County, as developers look beyond Loudoun County in search of larger and more affordable parcels of land.

Data center users and operators find the lower costs and greater site availability in Manassas attractive.

In 2017 the county has welcomed huge new data centers, including campuses for CloudHQ and Iron Mountain and additional sites for Amazon Web Services.

CloudHQ plans more facilities in Manassas, with site approval for a second large data center to follow on its 50MW MCC1 project. QTS Data Centers is actively developing a site secured with a 24MW pre-lease from a hyperscale tenant. The campus could eventually grow to 5 buildings and 150MW of capacity. Digital Realty also recently purchased a 62-acre site in Manassas, where it plans to deploy four buildings and up to 48MW.

Fairfax County

Fairfax County has also been the focus of new data center activity. In July, CoreSite received approval to add 100MW of data center capacity at its new campus in Reston. The milestone will allow the wholesale data center provider to move ahead with the redevelopment of the former Sunrise Technology Park, which CoreSite purchased in 2016. The Sunrise property is just a quarter mile from the company’s existing Reston campus, which is nearing capacity.

The VA2 data center building on the CoreSite campus in Reston, Virginia. (Photo: Rich Miller)

In 2Q 2018, zColo acquired its second Northern Virginia data center in McLean, where it will offer 3MW of commissioned power. zColo anticipates the 62,000 SF data center will attract both federal and enterprise data center users.

There’s also Element Critical, which acquired the Tyson Technology Center in Vienna, and is building upon a tenant base that includes Equinix and at least one hyperscale player. Lincoln Rackhouse owns several properties in Herndon, including a former Digital Realty site that Lincoln recently leased to hosting provider Atlantic.net.

Fauquier County

To the south of Prince William County, we are beginning to see data center development extend to Fauquier County. French cloud hosting giant OVH built a data center in Vint Hill in 2016. Around the same time, an unidentified company built a large data center facility on the ground of the U.S. Army Training Center in Warrenton. Local media have identified the tenant as Vadata, which builds data centers for Amazon Web Services. A second data center has been proposed at the Training Center, also with an unnamed company. Warrenton is about 40 miles from Ashburn.

Further south in Fauquier County, a new data center campus by Canadian developer PointOne Development is in planning stages at the Remington Technology Park in Remington, a 234-acre site planned for six buildings and 120MW.

Meanwhile, the Project Solutions Group (PSG) is marketing the Vint Hill Technology Campus as a development zone that can support up to 800,000 SF of data center buildings.

It remains to be seen if Fauquier can attract major users. The development teams behind PointOne and PSG include industry veterans with experience with hyperscale deals.

The Northern Virginia Data Center Market will also cover the following topics for the region in the coming weeks:

Download the full Data Center Frontier “Northern Virginia Data Center Market” special report, courtesy of RagingWire Data Centers

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.

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