December 19, 2018
Northern Virginia is home to the largest data center market in the United States and has shown no signs of slowing down this year. The region known as Data Center Alley spans Loudon, Price William and Fairfax counties and is home to an extensive fiber-optic network unrivaled in any other U.S. market.
According to Loudoun County Economic Development, over 70 percent of the world’s internet traffic flows through Northern Virginia’s data centers every day. In the early 90s, companies such as AOL set the stage for the massive fiber and power infrastructure that is available today. The existing infrastructure, paired with favorable tax policy and incentive packages, has made Data Center Alley one of the best markets in the U.S. for data centers.
The region is currently experiencing its highest demand in years, and developers are swooping in to purchase land for more data centers. In September, two of the area’s largest land purchases of the year were made by data center developers: Digital Realty purchased 424 acres near Dulles International Airport for $236.5 million, or roughly $557,800 per acre, and Microsoft scooped up 332 acres in Leesburg for $73 million, or roughly $219,900 per acre.
As land for these large data center developments becomes scarcer, land prices are expected to rise. Developers are also having to become more creative with the land available to them. In August, QTS Realty Trust announced the delivery of the area’s first three-story data center. According to the marketing site, the center, known as QTS Ashburn, has 180,000 square feet of enclosed space.
Amazon’s HQ2 announcement, as well as the presence of other large technology companies including Google, Microsoft and Facebook, ensure that Data Center Alley will remain the hottest data center market for years to come. What isn’t as certain is how data center developers will deal with the land scarcity and if multi-story data centers will become the norm.
– By Jack Blaine, Researcher, Washington, District of Columbia.