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Data Center Leasing in Northern Virginia Hits Record 115 MW in 2017

ASHBURN, Va. – Developers in Northern Virginia leased a record 115 megawatts of data center space in 2017, topping the 113 megawatts (MWs) absorbed in 2017, according to a new report.

The robust leasing has left just 22 megawatts of finished wholesale space available for leasing, according to Allen Tucker of JLL, which released its overview of national leasing trends in 2017 at the CAPRE 2018 Data Center Forecast Wednesday in Ashburn, Virginia.

“I think we’re going to see huge amounts of construction in 2018,” said Tucker. “In Northern Virginia, supply creates demand, and demand drives supply.”

The historic gains of the past two years follow on 62 megawatts of leasing in 2105. No other data center market in the world has recorded more than 59 MWs of leases in a calendar year, Tucker said.

The strong leasing in Virginia was the highlight in a banner year of continued growth for the data center industry. JLL reported global net absorption of 583.5 megawatts of capacity, led by 363.5 MWs in the United States and Canada, 135 MWs in Europe and 85  MWs in the Asia-Pacific region.

The total for the U.S. and Canada marked an 8.6 percent decline from 2016, when cloud computing platforms’ appetite for capacity drove leasing to unprecedented levels. That record activity left analysts wondering whether the 2016 total was a temporary phenomenon or represented a “new normal.” The 2017 results, while down slightly from 2016, make a strong case that cloud growth has fundamentally changed data center demand for the foreseeable future.

“Every time something new and innovative comes along, this market gets better and stronger,” said Lee Kestler, Chief Commercial Officer at Vantage Data Centers. “Everything that can move to digital will do so. We’re not going to be put out of business. There’s going to be pockets of success for everyone.”

Consolidation Brings New Entrants

The JLL report also showed how the ongoing industry consolidation has impacted the competitive landscape in the world’s largest market. More than 85 percent of the  leasing volume in Northern Virginia was controlled by just two firms:

  • Digital Realty landed 62 percent of leasing in Ashburn’s “Data Center Alley,” encompassing leasing at its two campuses and the properties added in its September acquisition of DuPont Fabros Technology, its primary competitor in Ashburn.
  • CyrusOne, which recorded 21 percent of the region’s leasing at its three campuses in Sterling.

That dynamic has triggered a surge of new players in Ashburn, who are betting that cloud providers will want to spread their data center capacity across multiple providers. CloudHQ, Iron Mountain and Central Colo entered the market in 2017, and Vantage Data Centers, Compass Datacenters and QTS Data Centers have all jumped into the market with large new campuses. COPT has emerged as one of the most active builders in the market, as it churns out new data center shells to support a massive expansion by Amazon Web Services.

The incumbents aren’t sitting still, either. Digital Realty is creating an enormous new campus, while RagingWire, CoreSite, Sabey Data Centers, Equinix and CyrusOne are all adding new capacity.


By: Rich Miller – February 2, 2018