American Real Estate Partners (AREP) has teamed with investor Harrison Street to acquire a piece of prime real estate in “Data Center Alley” in Ashburn, Virginia where it plans to build a 265,000 square foot data center. The project is part of a major building boom to add cloud computing capacity in Northern Virginia, the world’s largest data center market.
AREP paid $21.5 million to acquire a 10.3-acre property at the intersection of Beaumeade Circle and Loudoun County Parkway, one of the most strategic locations in the Ashburn market. The site at 21445 Beaumeade is next door to data centers for Equinix and RagingWire, and immediately adjacent to major new campuses for Equinix and Amazon Web Services. It also lies in close proximity to the original Equinix Ashburn campus, which is the center of connectivity in America’s most wired neighborhood.
AREP, which also owns the Quantum Park campus in Ashburn, plans to build a two-story, 265,000 square foot “powered shell” data center, with a finished structure and utility connections in place and the ability for a tenant to customize the infrastructure. Construction is scheduled to begin later this year and can be delivered on a fast-track basis, the company said.
“Demand for data centers far outstrips current capacity and recent construction is nearly 100 percent absorbed,” said AREP CEO Doug Fleit, who said the site “has all of the elements data center users are seeking with its extraordinary location and access to power and fiber. 21455 Beaumeade Circle’s ‘main and main’ location will enable AREP to meet this critical demand and furthers our investment strategy to develop assets that expand data availability and connectivity.”
Growing Focus on Ashburn
The Northern Virginia market experienced a record 500 megawatts of data center leasing in 2020, nearly doubling the prior record from 2018 as the COVID-19 pandemic created extraordinary demand. Data center developers are scrambling to add capacity, as all that leasing consumed much of the available supply of server space.
The deal price for 21445 Beaumeade works out to about $2.09 million per acre, just shy of the record $2.14 million per acre valuation of a 2019 acquisition of a site about a block south. Both deals reflect the premium for land in the most connected areas of the Ashburn data center district.
American Real Estate Partners has been an active player in the Ashburn real estate market in recent years, including the 1.8 million SF acquisition of Quantum Park and the development of a 445,000 SF headquarters for the US. Customs and Border Patrol Agency. Quantum Park is a former UUNet site that was a key connectivity hub dating to the early days of the Internet.
AREP was founded in 2003 and has acquired more than 17 million square feet of real estate totaling more than $4 billion in value. The company focuses on development in the Mid-Atlantic region, with a concentration of properties around Washington, D.C.
The site at 21455 Beaumeade Circle changed hands in 2018, when Chirisa Investments unveiled plans to build a 30-megawatt data center on the property. It was one of several planned projects that were delayed amid an oversupply of data center space in 2019, which was filled quickly when the pandemic hit.
This year there has been a resurgence in data center construction in Ashburn, especially in the Data Center Alley neighborhood around Beaumeade Circle.
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- Plans were filed for a for a $360 million data center project on an 18-acre site on Beaumeade Circle, just south of the AREP site.
- Equinix opened a new data center campus off Beaumeade Circle that will soon feature a fleet of four-story data centers.
- Cologix broke ground on a 1 million SF campus on the former site of the Christian Fellowship Church on Beaumeade Circle.
American Real Estate says build-to-suit developments are rising in frequency as large requirements enter the market from hyperscalers like Amazon, Microsoft, Google and Facebook. AREP has teamed with Harrison Street, which focuses on real estate in sectors like senior living, student housing and life sciences, but has recently stepped up its investments in the data center sector. In recent months, Harrison Street has teamed with 1547 Data Center Real Estate to acquire carrier hotel buildings in Milwaukee and Portland, Oregon.
“AREP with its successful track record and deep local connections is an ideal partner for Harrison Street and we look forward to working with AREP to capitalize on the significant data center demand in Ashburn,” said Michael Hochanadel, Head of Digital Real Estate at Harrison Street.