Originally posted on Harbor Link
For more than three decades, Virginia has actively shaped the meteoric rise of the internet, setting the stage for the digital age. From pioneering the first Internet Exchange (IX) in the early 1990s, to becoming the epicenter of today’s digital data universe, known as “Data Center Alley,” Virginia’s role in the evolution of global connectivity is beyond comparison. This region’s unique blend of technology, geography, and policy has made it a beacon for the data center industry, hosting an unparalleled convergence of data centers and the technologies that power our modern world.
The heart of Virginia’s data center activity currently lies in its northern region, with Loudoun and Prince William Counties leading the charge. In particular, Loudoun County, home to the dynamic city of Ashburn, stands out with its impressive roster of over 100 data centers. Beyond Ashburn, Loudoun County is home to more than 3500 technology companies with more than 30 million square feet of data center space available at the time of writing this post. This concentration of data centers cements its status as the largest data center market in the United States.
Decoding Northern Virginia’s Data Center Popularity
Northern Virginia’s rise as the premier data center hub is not just a product of its early embrace of digital infrastructure in the 1990s; it is the result of a strategic confluence of geographical advantages, technological advancements, and proactive policy measures. This region’s transformation into the core of digital data flow in the United States is supported by the accessibility created via its subsea cable systems, its attractive business incentives, and its readiness to meet the increasing demand for data processing and storage.
Subsea cables, vital for connecting countries separated by oceans, are situated near Northern Virginia, primarily in Virginia Beach, Virginia and Myrtle Beach, South Carolina. These cables provide back-haul connectivity to Ashburn and nearby areas, extending Data Center Alley’s reach internationally. Recently, three new international subsea cable systems — BRUSA, Maria and Dunant — were launched in Virginia Beach and terminated in Ashburn.
The state of Virginia actively attracts data center companies through tax incentives. For instance, in Loudoun County, available incentives include an exemption from the 6 percent sales and use tax for servers, generators, chillers and server-related equipment. This strategy, in turn, has benefited the entire state. Buddy Rizer, Loudoun County’s executive director for economic development, stated in February 2023 that “We will receive about $650 million in local tax revenue this year from the data centers. [The $576 million estimate in Loudoun’s 2023 projection does not include real estate tax and other tax revenue, Rizer said.] It’s about 3% of our land base, providing over 30% of our tax benefits.”
Today, the rise of AI, Machine Learning, cloud storage and other data-intensive applications are driving the demand for data centers even higher. With Northern Virginia continuing to be a leader in the industry, all that data runs the risk of becoming congested. As large data centers rely on the same connections and demand for high-speed, reliable connectivity continues to rise, new connections — especially high-speed fiber — offer relief to a traffic-heavy Data Center Alley.
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