As we head into 2025, the data center industry’s attention is focused on Ashburn, Northern Virginia’s “Data Center Alley,” the worlds’ largest data center hub. That’s because the local Loudoun County Planning Commission is considering proposals to require greater oversight of new data center developments with increased consideration of their impact on local communities, sustainability and land use.
Historically, the area has enabled data centers to be built “by right,” or under existing zoning codes without special permits, variances, or discretionary approvals from the local government. The new rules could slow data center development, which is in increasingly high demand with accelerating adoption of cloud computing, artificial intelligence (AI) and high-performance computing (HPC).
To put data center demand into perspective, consider that as of July 1, 2024, Loudoun County had approximately 43 million square feet of existing data centers and about 47 million square feet in the pipeline, an increase of roughly 60 million square feet from 2022, according to a September 2024 Loudoun County report.
Loudoun County’s decision, expected in first quarter 2025, could impact the future of data centers across the country, writes editors at Data Center Frontier, noting that Northern Virginia’s data center leadership makes it a bellwether for the industry.
With the region in the spotlight, let’s take a look at why and how it became Data Center Alley.
Why did Ashburn become “Data Center Alley”?
Becoming “Data Center Alley” was no accident for Ashburn, in Virginia’s Loudoun County, a community that set its sights on becoming North America’s premier data center hub. Ashburn accomplished this through tax incentives, a Fast-Track Commercial Incentive Program, attractive energy costs and unparalleled fiber infrastructure.
Ashburn is a vital part of the Dulles Technology Corridor and the world’s digital infrastructure—so much so that its other monikers are “The Data Center Capital of the World” and the “Colocation Mecca.”
Here’s a rundown on this Washington, D.C. suburb, how it became a global technology powerhouse, and why it’s the ideal location for colocation solutions.
Northern Virginia, home to one of the first large peering exchanges, became the fastest-growing data center market worldwide. Between Loudoun and Fairfax counties alone, there are approximately 118 data centers. Data center providers and users are drawn to the area because of its invaluable ecosystem built atop the world’s densest fiber network.
This unmatched level of connectivity is one of the reasons telecom and internet companies are drawn to Data Center Alley. Other benefits include:
- Strategic location
- Ashburn is located in Loudoun County, just 34 miles from Washington, D.C.
- Early internet infrastructure
- In the late 1990s, Ashburn was identified as an ideal location for data centers and internet infrastructure expansion.
- Superior connectivity
- Ashburn has extensive fiber infrastructure, including redundant fiber-optic loops and cross-connect opportunities.
- It connects to subsea fiber cables from Europe and South America that land in Virginia Beach.
- This robust fiber network provides high-speed, reliable connectivity.
- Cost advantages
- Land was initially available at reasonable prices.
- Virginia offers tax incentives for data center operations.
- Government support
- The Virginia state government recognized the industry’s potential early on.
- The state approved zoning ordinances to allow more data center construction.
- They offer programs like the Fast-Track Commercial Incentive Program to facilitate development.
- Skilled workforce
- The area has access to a highly educated population, with more than 60% of Loudoun County residents holding bachelor’s degrees.
- Low-risk location
Ashburn’s data center market
By the numbers, Ashburn, sometimes referred to as North Virginia’s data center market, shares impressive stats and incentives:Generous incentives exempting sales and use tax for vital data center infrastructure
- Data centers housing more than 3,500 technology firms
- An ecosystem supporting more than 12,000 regional jobs
- 14 straight years of uninterrupted – even for a day – data center construction
- Generous incentives exempting sales and use tax for vital data center infrastructure
The complete history of Data Center Alley
Pre-Data Center Alley
In 1992, a group of network providers in Virginia joined forces and connected their networks. Alternet, PSINet and Sprint-ICM worked with Metropolitan Fiber Systems to form MAE-East, one of the first internet exchanges. In 1993, the site was awarded a grant by the National Science Foundation, making it one of the four original Network Access Points. By the late 1990s, this section of North Virginia was viewed as the perfect place to expand internet and fiber networks. The land was reasonably priced, electricity costs were low and that area was near a skilled and educated population.
America Online (AOL) was among the first companies to set up its base there and brought with it an investment in fiber and power infrastructure. Other established companies followed – like Verizon, Orbital Sciences and Telos – that needed connectivity and power at scale. When Equinix (the world’s largest colocation data center) arrived in Ashburn, this connectivity scale generated a virtuous cycle of IT infrastructure investment. Like all data centers, Equinix creates the physical infrastructure that forms the backbone of the internet.
This campus of data centers formed the foundation for interconnectivity with massive potential. Each new connection contributed to the broader ecosystem, creating a compounding effect. Other companies, such as Digital Realty and Dupont Fabros (now owned by Digital Realty), began building outward from the campus to benefit from the powerful digital ecosystem. Demand for space in the Data Center Alley began to rise as more organizations realized the value of tapping into such a highly interconnected infrastructure, leading to the development of more facilities. The region evolved at such a phenomenal rate that, by 1997, half of the world’s traffic was flowing through it.
Over two decades, the industry evolved from a retail colocation market to the world’s data center capital. Everything from wholesale data suites to custom-built cloud facilities is available in Ashburn. Today, technology powerhouses like Google, Microsoft, Facebook, Oracle and Amazon have stakes in the Data Center Alley to support their rapidly growing cloud computing needs.
Establishing Data Center Alley
Infrastructure development in Ashburn is supported by the local government. The data center industry is recognized as a vital component of the modern economy, impacting every other major industry. Locally, it’s a large contributor to employment and a significant source of revenue for the state. In fact, Loudoun County has the highest median household income in the U.S., with nearby Fairfax County trailing closely behind.
Many of these accomplishments were fueled by the Virginia state government, which recognized this potential and played a major role in the development of Data Center Alley. In 2014, a Data Center Zoning Ordinance was approved to allow the construction of new data centers in more districts, provided they adhered to design guidelines. With the high demand for strategic positions on the map, multistory data facilities are encouraged to maximize space. Loudoun County also began offering the Fast-Track Commercial Incentive Program, which provides a dedicated project manager and gives data center projects priority on the development review list. It also facilitates tax exemptions for data centers that meet their criteria.
Powering Data Center Alley
The final element that makes Northern Virginia attractive to data centers is its power. Dominion Energy is the region’s main power utility, providing about 1 Gigawatt of reliable, low-cost energy throughout northern Virginia. This availability of stable power, in combination with the fiber infrastructure and government support, is essential to the ever-expanding data center space.
Northern Virginia data center trends to watch
Data center developers are already preparing for the next phase of cloud growth. New sectors such as artificial intelligence (AI), virtual reality (VR), and the Internet of Things (IoT) rely heavily on data center and IT infrastructure development.
To keep up with demand, Loudoun County’s Economic Development Department selected 43 potential sites for Data Center Alley’s next growth phase, and even this development may not be sufficient to support the industry’s rapid growth.
Notably, as Data Center Alley has sought to extend its global lead, it has dwarfed its global competition in securing additional power for its data center community.
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