In Data Center Alley, one of the world’s largest and most connected data center submarkets, located in Ashburn and Arcola, Virginia, a joint venture between American Real Estate Partners (AREP) and Harrison Street has announced a $1 billion commitment to develop six powered shell data centers totaling 2.1 million square feet of data center space.
“The demand for more data centers is simply based upon our society’s move to an even more integral life with technology,” said Doug Fleit, Chief Executive Officer (CEO) at AREP. “Every aspect of our lives is changing whether it is more connectivity with 5G and more robust streaming entertainment and communications, the inclusion of new augmented reality applications like Meta, self-driving cars and an endless evolution of new technologies and applications. We are creating not just exponentially more data but new and ever more useful ways to apply that data. All of this speaks to a long-term data center trend for markets like Ashburn, Virginia.”
The data center campuses will have six buildings ranging in size from 265,000 to 440,000 square feet, including the old AOL headquarters on Pacific Boulevard in Ashburn, which is now operated by Yahoo. The Ashburn data center campus will be built of four state-of-the-art powered shell data centers designed in a build-to-suit style for hyperscale tenants, with a total capacity of 300 MW.
The Arcola data center campus is near Dulles International Airport and is located on Arcola Boulevard, immediately across from Google’s new expansion. Two contemporary powered shell build-to-suit data centers with a capacity of 100-125 MW will be included in the Arcola development.
ABX-1 at Beaumeade, a 265,000 square foot two-story powered shell built right on Loudoun County Parkway, and on top of the Ashburn Fiber Ring, is the joint venture’s first building. The joint venture has already broken ground on this initial development. The land was purchased by AREP and Harrison Street in January 2021.
Hyperscale Cloud, Colocation Providers
The Northern Virginia data center submarket has one of the world’s greatest concentrations of data centers, a powerful fiber network, cheap energy costs for tenants and landlords, and local incentives for enterprises committing cash and generating employment. It has also been one of the most connected markets in the United States over the previous five years, with increased demand due to abundant electricity.
“Digital real estate is a core pillar of Harrison Street’s demographically driven investment strategy, and we are thrilled to significantly expand our presence in the world’s most active data center market,” said Michael Hochanadel, Managing Director and Head of Digital Real Estate at Harrison Street. “This transaction, in partnership with AREP, provides us with unique data center campuses and immediate scale in an attractive network-dense region ensuring hyperscale cloud providers and high-quality colocation operators have the capacity they need to support their customers. We look forward to working closely with AREP as we seek to identify strong data center investment opportunities in the region going forward.”
Harrison Street, AREP
Since 2018, Harrison Street has invested $2.4 billion in digital assets such as powered shells, carrier hotels, strategic colocations, and dark fiber, and has developed a dedicated team focused to investing across verticals that are important aspects of the digital ecosystem. Summit Infrastructure Group (SummitIG), a leading dark fiber network solutions and bandwidth infrastructure provider for carriers, content providers, data center operators, large enterprises, and government agencies, acquired a significant minority interest in Harrison Street in July 2021. SummitIG has more than 600 miles of 100% underground, newly constructed metro and regional dark fiber infrastructure in Northern Virginia.
In the Ashburn area, AREP has had a number of high-profile triumphs, including the acquisition of Quantum Park for 1.8 million square feet and the creation of a 445,000 square foot headquarters for the US Customs and Border Patrol Agency.
“As demand for data centers continues to far outstrip current capacity, AREP is focused on developing assets that expand data availability and connectivity,” added Doug Fleit. “Since partnering with Harrison Street in January 2021, we have executed on our commitment to acquire powered shell assets at scale for large cloud providers and colocation users in the Northern Virginia market that can be configured to best suit tenants’ power density and service needs.”