QTS Realty Trust has signed a 24 megawatt data center lease with a global cloud company, which will occupy a new data center building on land QTS has acquired in Manassas, Virginia.
The huge lease, which ranks among the larger deals in industry history, provides validation of the company’s strategy to retool its business to compete for hyperscale data center deals. It also illustrates the enormous demand for data center space in Northern Virginia, which is the world’s largest data center market – and growing fast.
QTS said its customer will lease the full 24 megawatt powered shell up front, and occupy five megawatts of turn-key data center capacity within the shell upon lease commencement. The customer is expected to sign future commitments, scaling to the full 24 megawatts of turn-key power capacity over approximately two years. The initial lease is expected to commence in the first quarter of 2019.
“QTS is pleased to expand our support of one of the world’s leading software companies,” said Chad Williams, Chairman and CEO of QTS. “This announcement reinforces our ability to execute on one of the company’s core strategies and serve as a strategic partner to the world’s largest and fastest growing technology companies. The Hyperscale vertical is a key component to the data center ecosystem, and a foundational part of QTS from the very outset.”
In conjunction with the lease signing, QTS has closed on the acquisition of 61 acres of vacant land in Manassas, which will create a new campus that the company expects will support more than 85 megawatts of gross power. This powered shell approach and gradual turn-key development enables QTS to support this customer’s needs within a disciplined capital plan.
Shift to Hyperscale
In recent months QTS has shifted its development focus, moving beyond retrofits of mega-scale industrial facilities to focus on ground-up cosntruction in the nation’s largest markets, most notably a new greenfield data center in Ashburn, Virginia. The company recently announced a restructuring that sharpens its focus on the hyperscale opportunity, including a major step back from in-house cloud computing and managed services, focusing instead on providing colocation “on-ramps” to major clouds.
In recent interviews, QTS executives say the company’s commitment to hyperscale has opened doors, making QTS a serious player in huge deals that will shape its future. The recent growth of cloud computing has super-sized the requirements for hyperscale customers, which now range from 5 megawatts to as much as 35 megawatts of space in major markets.
The company’s expansion into Northern Virginia last year kicked off a strategic shift in which QTS is buying land in the data center markets that are most attractive to companies deploying hyperscale cloud infrastructure. QTS acquired 53 acres on two parcels in Ashburn, Virginia as well as an 84-acre property in Phoenix and 92 acres in Hillsboro, Oregon, a data center hub just outside Portland.
The new project in Manassas reflects the next chapter in that expansion, with a development that was not on the QTS roadmap and effectively serves as a build-to-suit project. Manassas is also home to a huge new data center for CloudHQ, which featured a 35-megawatt lease to a single tenant.
Developers in Northern Virginia leased a record 115 megawatts of data center space in 2017, topping the 113 megawatts (MWs) absorbed in 2017, according to a new report.