Why Northern Virginia Dominates the Data Center Market – Who’s Building and Where?

Bart Dorst
October 11, 2018

Data center growth continues to increase across the country. However, there are certain areas that stand out from the rest, sometimes significantly so. For many years now, that has been Northern Virginia, particularly the area near the cities of Ashburn and Sterling, which has been dubbed “Data Center Alley” due to the immense density of providers here. What’s driving this growth? What companies are already there, and who is breaking ground?

Factors Influencing Growth

We’ll start with a look at what’s fueling the growth of data centers in the area in the first place. There are actually quite a few factors, and we’ll break those down for easier consumption and understanding.

Proximity to Washington

One of the single most important reasons for northern Virginia’s domination of the data center market is that it’s right on the doorstep of Washington D.C., without actually being in the city. Ashburn can be found just north of Dulles International Airport, meaning that it’s within a short distance of the national centers of power. Of course, it’s not just convenient access to Washington that’s drawing data centers here.

Fiber Connectivity

Looking around the nation, you’ll find that fiber connectivity has rolled out in quite a few markets, but it remains relatively limited. Northern Virginia is one market where fiber connectivity is widely available. Of course, there are many other regions where that is the case, so why aren’t data centers flocking to areas like Miami or Los Angeles? Tax incentives and energy costs are other factors.

Tax Incentives

When an area wants to attract new businesses, what is one of the first things it does? Leaders in the area attempt to make it as ideal an environment as possible and that usually means providing the means for the company to keep more of its profit through tax incentives. You’ll find that this is the case in northern Virginia.

Energy Costs

Another reason that northern Virginia is a better choice for data centers than other regions around the country is the fact that electricity costs less here. Data centers require vast amounts of power to operate, and increasing density needs mean that those costs are only going to increase. With cheaper power than many areas, northern Virginia stands out as a prime destination for energy-hungry data centers that want to save money without sacrificing access to power.

Plentiful (and Cheap) Labor: Ashburn and the rest of Data Center Alley have access to a pool of skilled, affordable labor that makes running a data center simpler and more affordable. Most of the workers in the area have college educations and are looking for long-term employment.

Land Costs

Yet another piece of the puzzle can be found in land costs. While a company might pay $16 million per acre for land in California, it might pay as little as $1 or $2 million per acre in northern Virginia, and those are just the recent highest prices. Plus, the land here is seismically stable, so data centers don’t need to worry about the construction requirements to deal with earthquakes. 

As you can see, there are plenty of reasons that Northern Virginia is a very attractive market for data centers. There are other motivators, too, such as accessibility to other tech companies, accessibility to other data centers, and proximity to well-developed and maintained transportation arteries.

Who’s in the Market?

So, who’s in the northern Virginia market? It might be more apt to ask who’s not there yet. Equinix, the largest colocation data center provider in the world, has 10 data centers in the area. Infomart Data Centers has a presence in the area, and there’s the Iron Mountain data center. Other names of note include RagingWire, CyrusOne, Zayo (zColo), Digital Realty, Vantage Data Centers, QTS, CoreSite, EdgeCore and more. You’ll also find them spread out around Ashburn, with Manassas, Fairfax, and Sterling all being hot areas.



Bart Dorst

Bart Dorst is an industry veteran with more than 20 years of experience in the data center, colocation, and IT hardware industry. Bart specializes in assisting clients with their data center infrastructure strategy, cloud strategy, and hybrid IT environments.

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