Data center developers continue to buy up land and properties in Northern Virginia, seeking to keep pace with unprecedented levels of demand for server space for cloud computing providers. In recent weeks COPT, DBT Data and CyrusOne have all acquired properties in Northern Virginia for data center projects to support cloud growth.
It’s just the latest round of development in Northern Virginia’s “Data Center Alley.” The area around the Internet connectivity hub in Ashburn is already home to more than 60 data centers, with 6 million square feet of data center space in Loudoun and another 2 million square feet in Prince William County.
There’s at least another 3 million square feet of cloud data centers under development, including new projects in the pipeline for Digital Realty, DuPont Fabros Technology, Equinix, RagingWire and INFOMART. Keeping track of the new construction isn’t easy, but a new report from Cushman & Wakefield offered some new insights into the activity in Northern Virginia market.
The report outlined new activity on several key land parcels in the heart of Ashburn. Sabey Data Centers has broken ground on its Intergate.Ashburn project, while details have begun to emerge about the planned development of a new data center campus on the Verizon propety off Loudoun County Parkway.
Data Center Land Grab
Cushman & Wakefield says data center developers are moving quickly to keep pace with huge demand from cloud providers.
“Developers are trying to stay ahead of demand and don’t want to be slowed down by the speed of their data center deployments,” writes William Hall, the Director of Data Center Research for Cushman & Wakefield. “The race for potential development sites has made land scarce, particularly in the area immediately around Ashburn.[clickToTweet tweet=”Cushman & Wakefield: The race for potential development sites has made land scarce around Ashburn.” quote=”Cushman & Wakefield: The race for potential development sites has made land scarce around Ashburn.”]
“Demand in the Northern Virginia market has prompted developers to compete to acquire available development sites in the region, with current developers even venturing outside of Loudoun County toward Manassas and other surrounding areas.”
Cloud Growth Means Larger Leases
As we’ve previously noted, the cloud computing arms race is accelerating, and the battle will be waged with data centers. The leading players are moving quickly to amass capacity for the clouds to come, resulting in huge deals for data center space under development. In recent “super-wholesale” deals, tenants have leased between 16 and 22 megawatts of space, some of the largest leases in the history of the multi-tenant data center industry. An industry report suggests Microsoft and Oracle are currently seeking even bigger deals of 25 megawatts or more.
Northern Virginia is perhaps the most connected piece of Internet real estate in the United States, housing servers for Facebook, Amazon Web Services, Google, Microsoft, Rackspace and about 2,900 other technology companies. Ashburn is the epicenter of the data center building boom, with active projects under development by most of the largest cloud builders.
The land around the Equinix connectivity hub in Ashburn has become some of the most valuable and strategic data center real estate in the world. The industry’s major players have kept a watchful eye over the available land parcels in Ashburn,
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Who’s Buying and Building?
Here’s a review of some of the latest developments in the Northern Virginia market:
DBT Data Centers
DBT DATA acquired two properties in May 2016, including a 130,000-square-foot shell in Sterling, which can reportedly accommodate an additional 200,000 square feet. DBT also bought a 24-acre parcel adjacent to the existing AOL campus in Ashburn, roughly one mile from the Equinix campus. DBT DATA, which is led by industry veteran David Tolson, has a track record of selling powered shell buildings to service providers like RagingWire.
In June, Corporate Office Properties Trust said it had purchased 62 acres of land at the Bethlehem Technology Park in Prince William County, and has signed leases for two entire buildings with an “investment-grade Fortune 500 company. A spokesperson for COPT told the Washington Business Journal that the projects would be data centers. to deliver one 152,500 square foot shell building in the fourth quarter of 2016 and one 215,500 square foot shell building in the second quarter of 201
COPT didn’t name the tenant. But in recent years the company has worked closely with cloud computing market leader Amazon Web Services to build data centers in Northern Virginia, including a three-building campus in Ashburn. In October 2015, COPT acquired 38 acres of land down the road from the AWS campus, and already has several structures under construction.
Quantum Park is the name of a property within the former Verizon Campus of 128 acres that will be repositioned as a data center campus. American Real Estate Partners teamed up with equity partner Davidson Kempner Capital Management to purchase the property late last year from Verizon, which has leased part of the proeprty to continue its operations.
The campus consists of two existing data center shells, along with four development sites. The current ownership will market the shell buildings and sites individually or as a bulk sale opportunity.
The two existing shells comprise a total of 289,000 square feet and can support up to 12 MW. When fully built, Cushman says this campus could support over 700,000 square feet of total data center space and 112 MW of ultimate capacity.
SABEY Data Centers
Sabey Data Centers hosted its groundbreaking ceremony in May for Phase I of Intergate.Ashburn. The Seattle-based developer acquired 38 acres of land in Ashburn in 2011 when it announced the project, but has taken a patient approach to its development timeline.
The first phase is expected to come online in October, and consists of four data halls with 12,000 square feet of raised floor and 1.8 MW each. The campus has the potential to accommodate two additional, 2-story buildings which are currently in the design process. As of June 2016, plans can support approximately 750,000 square feet and 50 MW.
In June, CyrusOne bought 40 acres of land in Sterling, about a mile from its existing two-building campus. CyrusOne purchased the property from Kincora, a 6.7-million-square-foot, mixed-use development property. CyrusOne intends to commission the facility in April 2017, and says the project will ultimately involve more than $1 billion in investment.
“Adding this new Northern Virginia location will not only benefit our growth trajectory, but is also vital to continuing to serve our Fortune 1000 .customers along the East Coast,” said Kevin Timmons, chief technology officer, CyrusOne
The Growth Pipeline
Four of Ashburn’s largest data center residents have already procured substantial pieces of property for their next phase of growth:
- Digital Realty, which has already built nearly 1.5 million square feet of space at its Ashburn campus, bought 126 acres in November 2015 and intends to build an additional 2 million square feet of space. The existing Digital Ashburn campus houses 1.5 million square feet of data center space in nine buildings to support tenants like Amazon Web Services, LinkedIn and major financial service providers. Digital Realty has invested $950 million thus far.
- In February DuPont Fabros bought two parcels totaling 44 acres across the street from its Ashburn Corporate Center (ACC) cloud campus, which already houses more than 1.6 million square feet of data center space, spread across six huge buildings – including several that are more than 1,100 feet in length.
- Equinix has run out of room on its original campus and in October broke ground on a 40 acre parcel that will be home to five new data centers. Equinix expects to invest at least $1 billion on its North Ashburn campus over the next 10 years.
- Last year INFOMART purchased the 180,000-square-foot Dulles Technology Center, which has been renamed Infomart Ashburn. The redeveloped property will provide 15 MW of supply to the Ashburn market in 2017.
- RagingWire was an early mover in the Loudon land grab. In 2012 the company bought nearly 80 acres of land in the heart of Ashburn’s “Data Center Alley” where it can build up to 2 million square feet of space.
Gains for Prince Williams?
The flurry of land acquisitions over the past year has reduced the number or prime plots available for development in Ashburn. Cushman & Wakefield sees a potential benefit for Prince William County, which has more than 2 million square feet of data centers.
“Iron Mountain tried to find suitable development sites in Loudoun County, but ultimately chose an 83-acre site in Manassas due to the sheer lack of development sites still remaining,” C&W says in its report. “Several key development sites to watch in Prince William County over the next 12 to 36 months are the Freedom I-66 Business Center (84 acres), Freedom Innovation Center (45 acres), Manassas Corporate Center (100 acres in development by Unicorn Interests, LLC / DuPont Fabros Development), and Pyramid Place (22.7 acres).”