Vantage Plans $1 Billion Northern Virginia Data Center Campus

Vantage Data Centers is entering the Northern Virginia market. And it’s not tip-toeing in, either.

Vantage plans to build more than 1 million square feet of data center space on 42 acres of land it recently acquired in Ashburn’s “Data Center Alley.” The company says it will invest more than $1 billion to add 108 megawatts of IT capacity to the fast-growing cloud cluster in Loudoun County.

“Northern Virginia  really is a ‘go big or go home’ market,” said Sureel Choksi, the CEO of Vantage, which is based in Santa Clara. “It’s the largest wholesale data center market in the world. It’s important for us to invest in a big presence.”

The expansion been anticipated since Digital Bridge Holdings acquired Vantage earlier this year to serve as a platform for a larger expansion into the wholesale data center industry. At the time, Digital Bridge CEO Marc Ganzi said Northern Virginia was high on the list of potential expansion markets.

The new Vantage campus will be located at the intersection of Route 28 and Waxpool Road, adjacent to the new Infomart Ashburn campus and less than 2 miles from the region’s primary interconnection hub at Equinix. Vantage plans to build five data center buildings at the site, which it purchased earlier this year. The company hopes to start construction in early 2018 and bring its first data center online in early 2019 with 24 megawatts of capacity.

Demand from Existing Customers

“Vantage’s expansion to Northern Virginia is in direct response to demand from our cloud and large technology enterprise customers, who have expansion plans on the east coast,” said Choksi. “Our customer base is cloud providers and very large enterprise technology companies. There’s a lot of crossover between Santa Clara and Ashburn. Northern Virginia is a vital and strategic market for our customers and company.”

Northern Virginia is also one of the most competitive data center markets in the world. Most of the leading service providers in the data center market already have a presence, and those that aren’t are trying to buy land to enter the market. Vantage arrives in Ashburn with an established track record in Santa Clara, a crowded market where Vantage has sold out all of its data center space and is busy building more capacity.

“Northern Virginia is a highly competitive market, and it’s warranted given the sheer amount of demand,” said Choksi. “It’s attracted a fair amount of competitors, and a number of newer entrants. We think there’s plenty of room in the market.”

Choksi said the competitive dynamic in Ashburn has shifted with the recent merger of the industry’s two largest wholesale providers, as Digital Realty acquired DuPont Fabros Technology in a $7.6 billion deal.

“It’s not lost on us that the number one and number two providers in Ashburn are now one company,” said Choksi. “That means some customers will look for alternatives, and I think we represent an attractive alternative.”

Building at Cloud Speed

That’s where the “go big” strategy comes into play. Choksi says the $1 billion investment in Ashburn is more than the company has spent in its home market of Santa Clara. “The focus is on creating options and the ability to deliver capacity as soon as possible,” said Choksi. “We secure a large amount of land, get a commitment from the power company, build large shells and fill them out rapidly. We think the high-touch market we’ve pioneered in Silicon Valley will be relevant in Northern Virginia.”

Vantage Data Centers was founded in 2010, when it began redeveloping an Intel data center property with backing from Silver Lake. That Santa Clara campus now features four finished data centers, with two more under construction. Vantage has acquired land for a major new campus in Santa Clara, and also operates a fully-leased data center in Quincy, Washington.

In Santa Clara, Vantage was one of the beneficiaries of the growing interest in variable resiliency, featuring data halls with less elaborate backup power infrastructure than traditional data centers. The company has won multiple deals for lab-style environments, whose high-density compute loads aren’t usually mission critical.

Choksi doesn’t expect these be a primary use case at first in cloud-centric Ashburn, but says artificial intelligence is creating more high-density workloads, and this will eventually become a more important component of the Northern Virginia market.

The push into Ashburn continues an active period for the Vantage team, which has remained intact in the wake of the Digital Bridge acquisition. There may be more expansion to come, Choksi said.

“It’s been a busy year, with the transaction, the new construction and our expansion,” said Choksi. “Our new capital partners have significant dry powder to invest in Vantage and extend its presence and brand. This is the first step.”