JLL: NoVa is still nation’s top data center market

Northern Virginia remains the country’s largest data center market, according to a report released Monday by real estate company JLL.

The 581 megawatts of capacity leased by energized — or built-out — data centers in Northern Virginia for 2023 represented a new record, according to the JLL report. Data centers leased 184 MW in capacity in energized buildings in Northern Virginia for the first half of 2023, and 397 MW in energized buildings during the second half of the year. (Data center leases are measured primarily by critical power supply, the electrical load devoted to a data center’s IT infrastructure such as data servers, communications switches and routers.)

By comparison, the primary North American data center markets saw 4.3 gigawatts of transactions in 2023, according to JLL report. Secondary markets added 554 megawatts for the year.

It’s the fourth straight year Northern Virginia has experienced record demand, according to the report, and secondary markets saw significant declines in their share of overall data center demand as a result.

The total inventory of gross square feet dedicated to data centers in Northern Virginia is about 51 million square feet, the report states, with about 167,000 square feet vacant and 13.4 million square feet under construction. An additional 58.6 million square feet of data center development is planned in Northern Virginia. The primary Virginia localities measured by the report were Loudoun and Prince William counties. 

In 2023, the region led the nation in data center leasing activity, with 1.6 gigawatts of transaction volume, including anticipated deliveries in the next few years, according to the North American Data Center Report. 

For all of North America, data center transaction volume in single-asset and portfolio sales was up to $4.6 billion for 2023, up from $2.8 billion in 2022, a 67% increase, according to the report. Figures for Northern Virginia were not available.

The power used by data centers in Virginia doubled between 2018 and 2022, according to Richmond-based utility Dominion Energy. That capacity is expected to double again statewide by 2028, based on customer orders, according to the report. Vacancy is below 2% and cloud computing makes up 82% of the demand in Northern Virginia. Behind that, other technology makes up for about 15% of the demand. Raw numbers by industry were not available.

According to the JLL report, there is a lack of available data center leasing options offering more than 1 megawatt. To address current constraints and meet future demand, Dominion Energy has two transmission lines under construction in Northern Virginia to serve the data center market. 

More than 70% of the world’s internet traffic comes through Data Center Alley, six square miles in Loudoun County’s Ashburn area, and in 2022, Northern Virginia accounted for 64% of the total new data center capacity brought online in primary markets across the U.S., according to the North American Data Center Trends Report by CBRE.

However, data centers have become a point of contention in Northern Virginia, particularly in Prince William County. Supervisors voted late last year to approve the Prince William Digital Gateway, a 2,100-acre, 23 million-square-foot campus that is expected to be the world’s largest data center facility, with an expected $500 million in local annual tax revenue when finished. The vote came after a 27-hour public meeting filled with residents opposing and supporting the project, and state lawmakers are pushing for more oversight of local data center decisions.

But localities in Central Virginia and points east and west are also courting data centers, and in January 2023, Amazon Web Services announced it would invest $35 billion by 2040 to establish multiple data center campuses across the commonwealth. There’s growing interest in areas outside Northern Virginia due to lower land prices and more available property, officials say.