The Future of Property Values and Power in Virginia's Loudoun County and 'Data Center Alley'

Loudoun County, Virginia, remains one of the most critical locations for data center development in the United States. "Data Center Alley" still hosts a significant, not to say the largest, percentage of the world’s internet traffic and plans are in place to continue the development of new data centers and campuses, even as the county looks to tighten regulation and limit expansion of the industry.

The demand for digital infrastructure grows, data centers continue to expand, and the result is driving up commercial property values and reshaping the county's real estate landscape. This growth is also causing tension, particularly with residents concerned about housing availability, environmental impact, and the strain on public resources. Data Center Frontier has covered this issue multiple times, most recently last December.

Collateral Impact of Data Center Development: Loudoun County's Property Market

Recent 2025 assessment data from Loudoun County indicates that property values have significantly increased across the board. The county's tax base has risen by 19.5% to $170.5 billion, with data centers accounting for a large portion of this growth.

The assessed value of data centers alone surged by 78.7%, from $23.7 billion to $42.3 billion which represents almost 23% of the county’s tax base. This is not unexpected given the rate of growth in the data center development in the county. According to Robert S. Wertz Jr., Loudoun County's commissioner of the revenue, the total value of taxable commercial property in the count has increased over 45% since assessments in 2024.

The residential sector has also seen a notable increase, largely due to the restricted supply of homes available for sale. Single-family home values in developed areas rose by an average of 7.34%, while rural single-family homes increased by 5.85%. The average home price in Loudoun County now stands at $983,625, reflecting the broader housing demand in the region. This represents a greater than 12% increase in property value for residential homes in the county since 2023.

As data centers continue to proliferate, the county is grappling with how to balance their economic benefits with their impact on other property types. While they generate substantial tax revenue, their presence can displace other forms of development, including residential and retail spaces, affecting long-term urban planning.

Addressing the Challenges of Data Center Growth

As we have previously covered, the county Chamber of Commerce members are heavily focused on what can be done to allow the growth of the data center industry in the county without having a negative impact on the quality of life of the county residents.

Some of the most significant issues the Chamber members are working on addressing include:

Proximity to Residential Areas - A key issue residents face is the proximity of data centers to homes. As these facilities expand, many are being built near residential neighborhoods, sparking concerns over noise pollution, aesthetic degradation, and electromagnetic interference. Loudoun County officials are now considering new zoning regulations to mitigate these effects.

Strain on the Power Grid – Likely the most significant concern is the energy demand required by data centers. The county currently hosts 199 operational data centers, with 117 more in the pipeline. This level of concentration has raised concerns about grid capacity, with studies indicating that future expansion could be limited by available electricity.

Supervisor Michael Turner highlighted this issue, noting that three potential outcomes may unfold:

Data center growth will slow due to power constraints.
Technological advancements will reduce power consumption, but demand will still outstrip supply.
Data centers will adopt self-sufficient power solutions, such as renewable energy and on-site battery storage.

All of these outcomes are in play, but it seems that slowing growth may be the easiest solution to implement.

Another major concern is that data center expansion is pushing out attainable housing projects. According to County Chair Phyllis Randall, developers intending to build affordable housing have been outbid by data center companies willing to pay significantly higher prices for land. This trend is contributing to a growing housing shortage, particularly for middle- and lower-income residents.

Quoted in loudounnow.com, Randall also says that this has become her constituents’ number one complaint:

I used to say to people, ‘the data centers do this for your tax rate and do this for the community. And people will say, ‘oh, OK, I didn't know that.’ Now I say, ‘the data centers do this for your tax rate and are really, really good for the community.’ And they say, ‘I don't care. I will pay more taxes. Stop building them.

A far cry from the days when data centers were basically not even considered by local residents as issues, as long as they weren’t eyesores or built in their backyards.

Loudoun County officials are actively working to update zoning regulations to better manage data center growth. The process is unfolding in two phases:

Phase One – Requiring special exception reviews for new data center projects.
Phase Two – Introducing stricter performance standards, setbacks from residential areas, and mandates for on-site renewable energy.

Supervisor Laura A. TeKrony emphasized that these changes aim to address resident concerns while still allowing the industry to thrive. Additionally, rural zoning regulations are being reviewed to ensure balanced growth across the county.

Quoted in that same article, Vice Chair Michael Turner sums up the issues succinctly:

We have 199 data centers on the ground. We currently have 49 million square feet built. We have another 117 in the pipeline, 84 parcels that have site plans on them for data centers. Presumably, the vast majority of those are by-right. An additional 74 I think, parcels representing what could be an additional 33 data centers. Nowhere else on planet Earth has that kind of a challenge.

To combat the displacement of attainable housing, Loudoun County is exploring several initiatives:

County Housing Authority – A proposed entity to oversee affordable housing development.
Land Banking – The county has begun acquiring land specifically for affordable housing projects.
Public-Private Partnerships – Exploring collaborations with schools and churches to build teacher and workforce housing.

It is clear that the future of data center development in Loudoun County will depend on a delicate balance between economic growth, regulatory oversight, and community needs. The county’s leadership recognizes that while data centers are a cornerstone of the local economy, their unchecked expansion could create long-term challenges, including housing shortages and infrastructure strain.

The data center industry is constantly looking to transition toward more sustainable models, incorporating renewable energy and off-grid power solutions. This shift could help mitigate concerns over power consumption and environmental impact, but ultimately, Loudoun County’s approach will serve as a case study for other regions facing similar challenges.

Loudoun County's FY 2026 Proposed Budget Is Released

This week, Virginia's Loudoun County released its FY 2026 Proposed Budget. The document notes how data centers are a major driver of revenue growth in Loudoun County, contributing significantly to both personal and real property tax revenues. As noted above, data centers generate almost 50% of Loudoun County property tax revenues.

Importantly, Loudoun County has now implemented measures such as a Revenue Stabilization Fund (RSF) to manage the risks associated with this revenue dependency. The FY 2026 budget reflects the strong growth in data center-related revenue, allowing for tax rate reductions while still funding critical services and infrastructure projects. But the county is mindful of the potential volatility in data center revenue and is planning for long-term fiscal sustainability.

The FY 2026 Proposed Budget notes how Loudoun County's revenue from personal property taxes, particularly from data centers, has grown significantly. From FY 2013 to FY 2026, revenue from this source has increased from $60 million to over $800 million.

Additionally, the county said its FY 2026 Proposed Budget benefits from $150 million in new revenue from the personal property tax portfolio, with $133 million generated specifically from computer equipment (primarily data centers). The county said data centers have also significantly impacted the real property tax portfolio.

In Tax Year (TY) 2025, 73% of the county's commercial portfolio is composed of data centers. The county said its overall commercial portfolio experienced a 50% increase in value between TY 2024 and TY 2025, largely driven by the appreciation of data center properties.

RSF Meets Positive Economic Outlook

The Loudoun County Board of Supervisors created the aformentioned Revenue Stabilization Fund (RSF) to manage the risks associated with the county's reliance on data center-related revenue. The RSF targets 10% of data center-related real and personal property tax revenue.

In in its FY 2026 Proposed Budget, Loudoun County acknowledges the risks associated with being heavily dependent on data center revenue, which can be volatile and difficult to forecast. The RSF is intended to mitigate these risks by providing a financial cushion in case of sudden changes in the data center industry.

For FY 2026, the budget proposes a $47.7 million contribution to the RSF, reflecting the unprecedented growth in data center revenues and the uncertainty around future revenue realization.

The county said its economic outlook for 2025 and 2026 is generally positive, with data centers being a key driver of its revenue base. The growth in data center-related revenue has allowed Loudoun County to lower tax rates while still increasing overall revenue.

The FY 2026 Proposed Budget includes an 11% growth rate in Local Tax Funding (LTF), which is higher than the 9% target initially recommended by the County Administrator. This higher growth rate is partly due to the substantial revenue generated by data centers.

The document notes how the growth in data center revenue has enabled Loudoun County to fund critical services and infrastructure projects without significantly increasing tax rates.

In a LinkedIn post, CBRE Americas Data Centers director Gordon Dolven highlighted how data center value per parcel in Loudoun County is 16x more than the next highest land use, while noting that the FY 2026 Proposed Budget cites $684,787,341 in Computer Equipment Tax Revenue, a jump of 17.8% versus 2023.

Dominion Energy Expands Data Center Capacity to 40 GW, Fueling Growth in Loudoun County and Beyond

Concurrently, Dominion Energy, Virginia’s largest utility provider, has revealed a staggering 88 percent increase in its contracted data center power capacity, surging from 21 GW in July 2024 to approximately 40 GW by December 2024. This remarkable growth of course underscores the accelerating demand for data center infrastructure in Northern Virginia, particularly in Loudoun County and its client, the world-renowned "Data Center Alley."

The utility’s Q4 earnings call highlighted the unprecedented pace of development, with CEO Robert Blue emphasizing that data center growth in Virginia is not only continuing but accelerating. “We’re taking every step to meet this opportunity,” Blue stated, reflecting on the company’s strategic investments to support the booming industry.

A Surge in Demand and Strategic Investments

To meet this surging demand, Dominion has revised its capital expenditure forecast, now projecting $50.1 billion in investments from 2025 to 2029 - a 16% increase over its previous estimate of $43.2 billion. These funds will support a multi-faceted approach to grid upgrades, power generation, and infrastructure development, ensuring the region remains a global leader in data center capacity.

The utility’s contracted data center demand is categorized into three stages: substation engineering letters of authorization, construction letters of authorization, and electrical service agreements. As of December 2024, 26 GW of demand is in the substation engineering stage, a 245 percent increase from the 8 GW reported in July 2024. Additionally, Dominion has 9 GW in electrical service agreements and 5 GW in construction authorization, signaling a robust pipeline of future projects.

Loudoun County: The Epicenter of Growth

Much of this growth is concentrated in Northern Virginia, with Loudoun County continuing to dominate as the epicenter of data center activity. Dominion is actively working on two major transmission projects, including the development of two new 500 kV lines that will add 6 GW of capacity to Eastern Loudoun alone. These projects are critical to sustaining the region’s status as the largest data center market globally, surpassing the combined size of the next four largest international hubs.

However, the growth is not confined to Loudoun County. Blue noted that expansion is spilling over into neighboring counties along the Interstate 95 corridor, reflecting the broader regional impact of the data center boom.

Innovative Systems and Renewable Energy Initiatives

Dominion attributes part of the surge in demand to a new system implemented in August 2024, which processes power requests in batches based on submission order. This streamlined approach has enabled the utility to manage the influx of requests more efficiently while maintaining grid reliability.

In 2024 alone, Dominion connected 15 new data centers, adding nearly 1GW of capacity. The utility anticipates connecting another 15 data centers in 2025, further solidifying Virginia’s position as a global data center powerhouse.

To support this growth, Dominion has adopted an “all of the above” energy strategy, as outlined in its 2024 Integrated Resource Plan (IRP). The plan emphasizes a diversified power generation portfolio, with 80 percent of capacity derived from carbon-free sources.

Key initiatives include the 2.6 GW Coastal Virginia Offshore Wind project, set to come online by the end of 2026, and the expansion of the Possum Point Power Station, which added 44 MW to its existing 645 MW capacity.

A Vision for the Future

Dominion’s investments are not just about meeting current demand but also about positioning Virginia as a leader in the era of artificial intelligence and advanced computing. The Coastal Virginia Offshore Wind project, in particular, is expected to play a pivotal role in supporting AI-driven energy needs and maintaining America’s technological preeminence.

As Loudoun County and the broader Northern Virginia region continue to attract data center developers, Dominion Energy’s proactive approach ensures that the infrastructure will be in place to support this growth. With its ambitious capital plans, innovative systems, and commitment to renewable energy, Dominion is laying the groundwork for a sustainable and resilient data center ecosystem that will drive economic growth and technological innovation for years to come.

Bottom line: The story of Data Center Alley is far from complete—it’s just entering its next chapter.

Buddy Rizer serves as the Executive Director for economic development in Loudoun County, Virginia, which was named the 2021 Economic Development Organization of the Year by the International Economic Development Council. He leads the agency responsible for encouraging growth and developing relationships with Loudoun’s business community in both the commercial and agricultural-based business sectors.

During his tenure, Rizer and his team have attracted more than $65 billion in new commercial investment and more than 55 thousand new jobs. During this time, the growth in the commercial based has helped lower the tax rate in Loudoun by more than 42 cents on the dollar, saving residents thousands of dollars annually on their tax bill.

In 2007, Rizer joined Loudoun County and helped build “Data Center Alley” into the largest concentration of data centers in the world. He also has extensive international business development experience in China, France, Germany, Russia, Ireland, United Kingdom, Finland, Taiwan, Japan, India, Korea, Ghana, Uruguay, and the United Arab Emirates.

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