Amazon Plans Epic Data Center Expansion in Northern Virginia

Amazon Web Services (AWS) is working with a real estate partner to build nearly 2 million square feet of additional data center space in Northern Virginia, which is already home to the world’s largest concentration of cloud computing infrastructure.

The new data centers will provide additional capacity for Amazon’s fast-growing cloud computing operation.

Northern Virginia is strategically important to AWS, whose US East region spans at least 29 data centers across Loudoun and Prince William counties. The region is one of the primary battlegrounds in the cloud computing wars, as Microsoft, Google and Oracle are also adding data centers in their bid to gain ground on Amazon.

Amazon’s development ambitions are described in SEC filings from Corporate Office Properties Trust (COPT), which has been AWS’ primary data center developer in Northern Virginia. COPT is selling stock to fund the construction of up to 11 new data centers in Northern Virginia in 2018 and 2019. The developer laid out a schedule that would bring 1.9 million square feet of capacity online for AWS in an eight-month period from Oct. 2018 through June 2019.

That means that the real estate land grab in Loudoun and Prince William counties will likely continue. The appetite for cloud capacity has prompted a burst of data center leasing and land deals recently in Northern Virginia, as data center developers lay the groundwork for the next phase of cloud growth.  (See Northern Virginia Data Center Growth on Overdrive for More)

Building the On-Ramp to the Cloud

COPT is a real estate investment trust that is a leading landlord for the U.S. government and defense contractors. The company is best known for leasing specialized space for national security tenants, but has quietly become one of the largest providers of cloud computing real estate.

The company has leased nearly 2 million square feet of data center space to Amazon Web Services over the past three years, and has another 447,000 square feet under construction, according to SEC filings, all of it in Northern Virginia. That footprint spans 12 different leases with Vadata Inc., the business unit that operates Amazon’s data centers, which pays COPT annual rent of $19.3 million.

In its recent SEC filing, the developer laid out plans to spend $383 million to bring 1.96 million square feet of new capacity online. The filing never names Amazon, but its description of the tenant matches only one COPT customer, which is Vadata. “These projects are meant to expand on the company’s relationship with an existing tenant, which currently leases 1.9 million square feet of operational data center space,” COPT said in its stock offering.

As a caveat, COPT noted that only the first of the 11 planned projects has been leased. But COPT said it works closely with customers to understand their future development needs and deliver capacity as needed. This reflects a growing trend in the data center industry, prompted by the shorter timelines sought by hyperscale providers, who now seek to have new capacity delivered within six to nine months. Those tighter deployment schedules require these cloud builders to share more details about what type of capacity they want, and when they need it.

Looking for Land

COPT says that its “shadow pipeline” surged in the past 90 days to include 2 million square feet of data center space. The stock offering suggests a high degree of confidence that the projects will materialize.

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During its earnings call, the company indicated that it will be acquiring land to support its data center projects.

“We work in harmony with our primary customers to identify land that meets their needs and will allow us to give them the appropriate cost structure that they’re looking for,” said Stephen Budorick, President and CEO of Corporate Office Properties Trust. “We’re in multiple counties, in multiple locations, almost continuously evaluating land opportunities. Indeed, if we fulfill what we expect to, we’ll be acquiring additional land, generally in conjunction with the pre-lease for the ultimate campus that will go on that land.”

The “multiple counties” comment suggests that COPT is scouting properties in both Loudoun and Prince William, the two counties that comprise the heart of Northern Virginia’s data center market. COPT has built projects in both counties for Amazon.

COPT is developing these two new data centers in Ashburn, Virginia. Amazon Web Services is believed to be the tenant. (Photo: Rich Miller)

Amazon Web Services is believed to operate at least nine data centers in Sterling and nine in Ashburn (with two more under construction) as well seven in Manassas. The company also has two data facilities in Chantilly, and one in Haymarket in Prince William County.

Amazon doesn’t disclose the full scope of its infrastructure, but third-party estimates peg its U.S. data center network at about 700 megawatts of IT capacity, with as much as 500 MW of that total focused in US East. A Greenpeace analysis of the company’s energy use suggests AWS may soon have more than 1 gigawatt of data center capacity supporting its huge US East data center cluster.

Amazon standardizes its data centers to house between 50,000 and 80,000 servers, according to company presentations. That consistent approach can seen in COPT’s recent data center projects, which typically come in two standard sizes of about 150,000 square feet or 215,000 square feet.

In its work with Amazon, COPT builds out powered shells, undeveloped space with the power and fiber connectivity already in place. Amazon then fills the building with its custom-built data center infrastructure.

Thus far, Amazon is believed to be the only hyperscale provider working with COPT. But that could change, given the developer’s demonstrated ability to deliver capacity in bulk for a leading cloud provider.

“We have some preliminary discussions with other people in the industry for something similar,” Budorick said on the COPT earnings call.