Northern Virginia, specifically the adjoining Loudoun, Fairfax, and Prince William counties, all in close proximity to Washington, D.C., is the biggest data center market in the world, according to Cushman & Wakefield, the global commercial real estate services firm. Northern Virginia dwarfs all major data center markets worldwide and is larger than all other U.S. markets combined. Such data center scale of operation and concentration brings substantial opportunities and some pretty significant challenges. Victor Hoskins, President/CEO, Fairfax County Economic Development Authority (FCEDA) and Juan Font, President and CEO of CoreSite and SVP of U.S. Tower, shared with Inside Towers their perspectives of the growth outlook for Northern Virginia.
Earlier this year, reports surfaced that Northern Virginia may be facing power shortages that could last several years. “There was a specific area in Loudoun County that was having the issue,” acknowledges Hoskins. “They have since resolved the issue but there is so much demand. In the last five years, we’ve doubled the data center capacity in our region. It was clearly going to be a challenge, but it specifically presented a challenge in Loudoun County because so many data centers were moving forward simultaneously.” The local power company, Dominion Virginia Power, is facing a long-term challenge but came up with a short-term strategy. “But there was a choke point there for a moment,” he says.
Hoskins and FCEDA are working hard to avoid such choke points in future. “We actually work in collaboration with nine other jurisdictions through Northern Virginia Economic Development Alliance because the data center industry affects each of our jurisdictions. I also work with another group called Connected DMV (District of Columbia-Maryland-Virginia). About a year and a half ago, the group realized that there’s going to be a problem with power even beyond data centers no matter what we do. It’s also the expansion of our tech industry, our AI and data science sectors. Everybody’s absorbing a lot of power.”
The DMV encompasses three airports, two seaports, and extensive data center infrastructure that all needs to be fed. Connected DMV developed a “greenprint for hydrogen” for the entire DMV region that involves all the power companies, the airports and ports, and the data center community, and provides a strategy for meeting the power needs and reducing carbon emissions.
Founded over three years ago by Stu Solomon, a former global Managing Partner for Accenture, Connected DMV is a private, non-profit that is co-led by the private sector, government sector, and education along with philanthropic and non-profit organizations. “I’ve been involved with them from the beginning because there are things outside of my county, outside of my region, in the Northern Virginia region, that need to be done in order for us to be successful,” says Hoskins. “That’s the greenprint. We know it’s a challenge but we’re ready to meet the challenge.”
CoreSite, an American Tower (NYSE: AMT) company, has a big presence in Northern Virginia. Font says, “Data center demand is not slowing down.” Starting in Fairfax County in 2007, CoreSite acquired the old headquarters of AOL that was the internet back then. AOL moved to Ashburn in Loudoun County and spawned the data center concentration there. “It was ideal for us because the building had a lot of fiber coming in,” he explains.
It took CoreSite seven years to fill its first data center facility in Virginia, VA1, which was about 200,000 square feet. VA2, at roughly the same size with about 12 MW, took only three years to fill. “That just shows you just how much demand there is. If you think of the cloud as a utility, it is being built before our eyes. This notion of having limitless compute and storage capacity at your fingertips for any application, requires data centers,” says Font.
The amount of data being generated and processed continues to grow, feeding more data center demand. Font thinks the data center business is just “in the second or third inning” and that accelerating data center demand will continue “at least for the next decade.”
On the impact of AI, Font comments, “AI represents a generational opportunity of data center demand. AI-related workloads and training models are going to require multiple Gigawatts of capacity that does not exist today. As far as Data Center Alley is concerned, we already saw record levels of absorption last year at over 600 MWs, and we are already at historically low vacancy levels in the low single digits. So, this incremental AI demand is only going to add more pressure to an already strained market.”
Font continued, “That said, many players have significant land banking already entitled and permitted that will be developed as soon as power transmission and distribution constraints get resolved. I do also foresee the creation of new submarkets beyond Ashburn of Prince William County into places like Leesburg, VA or Frederik, MD, for example.”
Read Part 2 here.
By John Celentano, Inside Towers Business Editor
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