The cloud needs more land. Housing the servers that power the cloud has become a real estate challenge in Northern Virginia.

The booming revenue for online platforms like Amazon, Meta, Microsoft and Google translates into physical infrastructure. As “Data Center Alley” expands beyond the primary industrial corridors in hubs like Ashburn and Manassas, local officials are grappling to define the best locations for long-term development. Cloud builders’ appetite for real estate has left a limited supply of development parcels, and driven land prices higher.

“Right now, with land so scarce and prices so high, it’s hard for land owners and operators to determine their best path for growth,” said Buddy Rizer, the Executive Director of Economic Development for Loudoun County. “We are looking at how to maximize the remaining land.”


Today we continue our series on cloud growth in Northern Virginia with a look at the future options for new data center projects in Loudoun County, which hosts the world’s largest concentration of data centers, with 27 million square feet of server farms and another 9 million square feet in the pipeline.

In recent meetings, the Loudoun Board of Supervisors has vigorously debated the industry’s impact on land values, residential communities, tax rates, and the county budget. The board indicated it will be more discriminating about allowing data centers to expand into residential neighborhoods and retail corridors. A similar conversation is underway in Prince William County, which also has a strong data center presence.

Meanwhile, nearby regions like Fauquier County in Virginia and Frederick County in Maryland are pitching for data center business, hoping to capitalize as the industry grows beyond its traditional hubs.

Rizer: Runway Remains in Loudoun

Data Center Alley expects to retain its leadership position in cloud development, according to Rizer.

“We think there’s still plenty of opportunity for growth in Loudoun County,” he said. “We’ve approved over 8 million square feet of data centers this year, and there’s probably another 15 million square feet of development just on the existing land that’s already controlled by data center operators. I think our board will still be supportive of data centers in the right locations.”

Finding the right locations is a priority for Rizer and other officials in Loudoun, where the data center industry contributes more than $500 million in taxes annually. In most markets, that 15 million square feet of development parcels would last many years.

But in Loudoun, developers have deployed more than 21 million square feet of data center space in the last decade, with much of that growth coming since 2018. There’s a full pipeline of more data center projects, including at least eight new players entering the Northern Virginia market.

The economic development team is working with the board of supervisors to define potential future data center districts, as well as the places where they should be excluded – which thus far has proven to be the easier task.

The county commissioned a land use study by ARUP, which came back with two recommendations:

  • Immediately prohibit data center development along the Route 7 corridor, which has available land but currently lacks the utility capacity to support data centers. Data centers are currently allowed in the area, but building there would require an expensive and disruptive investment in new utility lines.
  • Consider focusing future development in the Southeast corner of the county in an area dubbed Dulles Cloud South, which has better access to utility power and enough open land to support up to 56 million square feet of data center development. The area could also support the development of on-site renewable energy, a priority for data center operators.

In a Feb. 16 meeting, the Loudoun Transportation and Land Use Committee (TLUS) reviewed the recommendations. The committee affirmed the recommendation to restrict data center development on Route 7, sending that proposal to the full Board of Supervisors for action.

“Route 7 shouldn’t have been a surprise to anyone,” said Rizer. “We’ve long said that we didn’t want data center development there because the infrastructure is not there to support it.”


But the TLUC declined to advance the Dulles Cloud South proposal, which had the potential to ensure long-term data center growth in Loudoun County. A key issue was that the land is within a transition zone, as defined by the county comprehensive plan, and designed to serve as a buffer between the vibrant business districts along the Dulles Greenway and rural farms and wineries.

“I don’t want to see any more data centers in the (transition area),” said Supervisor Tony Buffington, also a member of TLUC. “This Dulles Cloud South idea is horrible to me. I will fight this so hard every step of the way, and I want to be clear on that.”

Other members of the committee also had misgivings about the location. The TLUC asked Rizer to look for other options, perhaps working with the Data Center Coalition, an industry group that works closely with the Northern Virginia data center community.

“We went into it knowing that from a political perspective, Loudon Cloud South might be a tough sell,” said Rizer. “We’ve identified other parcels in the county as well.”

‘Nobody’s Written a Playbook for This’

Cloud services have become essential to the economy, especially during the COVID-19 pandemic. That’s driving extraordinary growth for the data center industry, with cloud builders like Amazon Web Services (AWS), Google, Microsoft and Facebook investing billions of dollars in real estate and buildings to deploy more servers. As an example, AWS has spent $35 billion on its cloud computing infrastructure in Northern Virginia over the past 10 years, illustrating the enormous impact data centers can have on regional economies.

In our DCF 2022 forecast, one of our predictions was that data centers will confront growing community resistance as they become more common in suburban and rural landscapes. This has been reflected in growing scrutiny of the concentration of data centers in Loudoun County and their impact on the community. In recent meetings, the Loudoun planning commission and supervisors have grappled with several proposed data center projects that are adjacent to residential neighborhoods or require rezoning.

Meanwhile, “land banking” by data center developers has pushed land values for data center parcels past $3 million an acre, up from about $500,00 as recently as 2017. “Loudoun land is the most sought-after asset for this industry,” said Rizer.

One way to make the most of the available real estate is to go vertical. In recent years, Loudoun County has embraced multi-story data centers, with a number of three-story projects and some four-story data centers in the planning stage.

Another recent trend in data center development is to buy land with existing buildings, which are then demolished to make way for purpose-built data centers. That’s the approach for several new projects, and some market watchers expect to see more of it, especially in the heart of Data Center Alley in Ashburn.

“That’s something we’ll be watching,” said Rizer. “It won’t be appropriate in every case. I’d note that there’s still a sub 2% vacancy rate in industrial properties.”

Rizer said new players continue to evaluate options to enter the Loudoun market. “If you’re not here, you want to be here,” he said. “Things are moving fast. I’m still hyper focused on serving the community of providers that are here and making sure we maximize the real estate we have left.”

“I still really look at us as a data center friendly environment,” Rizer added. “Unfortunately, the conversations can sometimes become viewed as anti-data center. Nobody’s written a playbook for this. I still think there’s plenty of opportunity, and the partnership with the data center industry is strong. We’re still rolling.”