Economic development officials and data center marketers from the part of Virginia that’s often referred to as “Data Center Alley” like to say that 70 percent of all internet traffic travels through the area – mostly through Ashburn.
The origins of that estimate are murky. “It actually can’t be proven,” Jim Leach, VP of marketing at RagingWire, the NTT-owned data center provider that entered the Northern Virginia market several years ago, admitted.
But regardless of how accurate that number is, it’s hard to argue that the region is not a core nerve center of the web. It played a crucial role in early development of network infrastructure in the US in the 90s and has continued snowballing since. Today, it’s the largest single-region data center market in the world, concentrated in Loudoun and Prince Williams counties.
Tuesday at Data Center World, Leach moderated a panel of experts who discussed the drivers that made the Northern Virginia market what it is today. As for RagingWire, entering the market “was the most important thing the company ever did,” he said.
It began in the early 90s, when MAE-East, one of the first internet exchanges, was established in the area. The pioneering internet company America Online (AOL) facilitated a lot of the early fiber and power infrastructure buildout there, Allen Tucker, a managing director at Jones Lang LaSalle and one of the key data center real estate brokers in the region, said.
Then came Equinix, which first built its DC1 data center in Ashburn and started selling access to the interconnection ecosystem in the region and space and power to go along with that access. It followed with the much bigger DC2 facility. According to Allen, DC2 is the most interconnected building in the world today.
The market has been building outward from the DC2 epicenter ever since, he explained, with companies wanting to tap into the rich interconnection ecosystem.
As the biggest cloud providers embarked on the most recent wave of data center expansion, they all made Northern Virginia a core part of that buildout, making for an unprecedented data center construction boom over the last several years.
Last year alone, companies leased 115MW of data center capacity in Northern Virginia, Tucker said. No market in the US has ever had more than 59MW of capacity absorbed in a single year, he said.
Dominion Energy, the utility that serves the area, delivers about 1 Gigawatt of power to Northern Virginia, Stan Blackwell, Dominion’s director of customer solutions and strategic partnerships, said. Of that, about 800MW is consumed in Loudoun and Prince Williams counties. The utility serves 45 distinct data center companies in the market.
The amount of fiber infrastructure, the panelists agreed, was the primary demand driver in the region. By having physical data center footprint in Ashburn or the surrounding area a company can get access to hundreds of networks that will take its traffic virtually anywhere in the world.
Fiber was the primary reason Google established a network node in Northern Virginia years ago. Last year, the company launched its first cloud availability region in the market and bought two plots of land there to ensure it can continue expanding.
Fiber, availability of power, and the data center ecosystem are the main reasons Google is expanding in Northern Virginia, panelist Josh Timberlake, who oversees data center site selection on Google’s Global Infrastructure team, said.
The two plots of land Google acquired are actually outside of Data Center Alley, and that’s because the recent boom hasn’t left many suitable options for someone looking to buy a big piece of land in the core market.
The plots are in Loudoun County, and Google can still access the all the fiber and data center ecosystem the market has to offer, Timberlake said.
Because the sites are outside the core market, the company also saved some money. The recent boom has caused real estate prices in Ashburn to skyrocket.
While the price of land is an important consideration in site selection, it’s only one factor, Timberlake said. And, as the company expands a data center campus, the upfront cost of buying the land becomes an increasingly small part of the total spend.
If real estate prices deterred people from moving into an area, places like Manhattan wouldn’t be what they are today, JLL’s Tucker said. Northern Virginia “is the Manhattan of the internet,” he said. “It’s going to be expensive.”