Loudoun County, which comprises ~80% of the inventory within Northern Virginia, the largest data center concentration in the United States, has had its developable land for data centers become scarcer in recent years. As such, the county is identifying the most suitable locations for future data center development, as well as reviewing those areas that are not appropriate. As part of this review, Loudoun County’s Route 7 Corridor is an area where a prohibition on constructing data centers is being considered. While Dulles Cloud South was identified as a potential new area for data center development by Loudoun County’s Department of Economic Development (DED) – but was ultimately met with an uninterested reception from Loudoun County’s Transportation and Land Use Committee (TLUC).

Background – Loudoun County Data Centers

In less than 10 years, from 2012 to 2021, data center space has increased more than four-fold in Loudoun County, from 5 million sqft of building space to over 26 million sqft at present. Further, Loudoun County has an additional 4 million sqft under development.

In terms of power capacity, Northern Virginia’s data center inventory has grown to over 1,500 megawatts of commissioned power, while the market’s vacancy rate has stayed consistently below 10%, demonstrating Northern Virginia’s strong leasing absorption.

Northern Virginia – Inventory (Power Capacity) and Vacancy Rate

This growth in data center space has led to an expansion in Loudoun County’s computer equipment tax revenue, which is estimated to surpass $500m annually for FY22. At the same time, the county has benefitted from 4.0k+ direct full-time jobs being provided by the data center industry.

As shown and numbered below, within Loudoun County, the majority of data centers can be grouped into three distinct areas:

  1. Data Center Alley in Ashburn, Virginia
  2. Greenway West near Leesburg, Virginia
  3. U.S. Route 50 and Virginia State Route 606
Loudoun County – Existing Data Centers
Loudoun County Existing Data Centers

Strategically, Loudoun County is an important location for the data center industry, due to the concentration of fiber infrastructure. However, the county has only a finite amount of land and current power availability – both factors which support the commercial development of data centers. Therefore, Loudoun County’s remaining commercial land is critically important to supporting the data center industry.

Regarding power, below is a depiction of the high voltage transmission lines (signified as dark green), which deliver electricity in Loudoun County.

Loudoun County – Electric Utility Access Map

Availability of power is a critical factor in the development of data centers, while the addition of new power routes is a very disruptive event. For example, there is currently no power infrastructure along the Route 7 Corridor, however, high voltage transmission lines do intersect south of Dulles International Airport, in the newly identified Dulles Cloud South area.

To fuel the region’s continued growth in data centers, Loudoun County’s Department of Economic Development (DED) highlighted the potential to enable the development of a new opportunity area called Dulles Cloud South. Specifically, the DED identifies Dulles Cloud South as potentially enabling more than 56 million sqft of data center space to be built, which could generate over $1bn of tax revenue annually for Loudoun County. Concurrently, Loudoun County is considering a prohibition on constructing data centers in the Route 7 Corridor area, as part of its ongoing zoning ordinance rewrite – with its rationale being premised on land use conflicts, power, and economic diversification.

With this background, Dgtl Infra reviews the contrasting Route 7 Corridor and Dulles Cloud South areas of Loudoun County in further detail. As shown through the map of Loudoun County below, the Route 7 Corridor is the red area (#1) at the top of the map, while Dulles Cloud South is the yellow area (#2) at the bottom of the map.

Loudoun County – Data Center Land Use Map
Loudoun County Data Center Map Route 7 Corridor Dulles Cloud South

Route 7 Corridor – Loudoun County – Overview

The Route 7 Corridor is defined as the areas along the north and south sides of Route 7, between the eastern boundary of the town of Leesburg, Virginia and the boundary of Fairfax County, Virginia. Along the Route 7 Corridor (red area below), data centers are permitted by-right*, even though there is no electrical infrastructure to support their development. Indeed, several land parcels are situated along the Route 7 Corridor that allow for data center uses by-right.

*Note: by-right infers that data centers are a permissible use in the zoning district and are not subject to special review and approval.

Route 7 Corridor
Route 7 Corridor Data Center Map

To-date, Loudoun County has ensured data centers have not been built in the Route 7 Corridor, through ‘soft’ means, despite high demand from developers and land owners. However, as Buddy Rizer, Executive Director of Loudoun County’s Department of Economic Development (DED), noted “Dominion Power would likely be required by statute to run high voltage power lines to this corridor, and it could be up to three miles of towers down Route 7, if even one data center was built on the Route 7 Corridor”.

Zoning Overlay District

Given the rising pressure on Loudoun County from private investors and electric utility companies alike, the county is considering the creation of a zoning overlay district in its ongoing zoning ordinance rewrite, which would prohibit construction of data centers along the Route 7 Corridor.

Rationale for Loudoun County’s desire to prohibit data center development along the Route 7 Corridor is multi-fold:

  1. Land Use Conflict: Loudoun County’s 2019 General Plan designates three place types along the Route 7 Corridor, none of which envision data centers as an allowable use
  2. Power: adequate power connections are not currently built along the Route 7 Corridor. Therefore, major overhead transmission line extensions would be necessary to provide sufficient power
  3. Economic Diversification: heightened competition for land in Loudoun County from the data center industry and thus, elevated land prices, means that other commercial real estate use types, such as office, retail, and industrial, are having their growth hindered in the county

Transportation and Land Use Committee (TLUC) Feedback

Presently, no action has been taken by Loudoun County to prohibit the construction of data centers along the Route 7 Corridor. Instead, further research is ongoing to discern the optimal form to implement a prohibition, with a decision to be made at a later date.

To this end, prohibiting data center development along the Route 7 Corridor is a sensitive issue for a number of Loudoun County stakeholders. As Caleb Kershner who represents Loudoun County’s Catoctin District on the Board of Supervisors noted “a lot of concerns from the industry”, mostly developers, with the big concern being “they have made multi-million dollar decisions in certain places, potentially, or investments, or certainly plans. And they are concerned that some of that may be impacted by some of this design”.


Dulles Cloud South – Loudoun County – Overview

Loudoun County’s Department of Economic Development (DED) identified Dulles Cloud South as a new opportunity area to potentially allow data center development by-right. Specifically, Dulles Cloud South is situated south of Dulles International Airport and south of Braddock Road (yellow area below).

Dulles Cloud South
Dulles Cloud South Data Center Map

Presently, the Dulles Cloud South area contains land parcels that have a designation in Loudoun County’s 2019 General Plan where data centers are not envisioned as an allowable use. In other words, there is a land use conflict with data centers in the Dulles Cloud South area.

Nevertheless, DED notes that Dulles Cloud South is well-situated for data center development given its proximity to power and significant contiguous undeveloped greenfield land. Theoretically, Dulles Cloud South could support the development of more than 56 million sqft of data center space, which could generate over $1bn of tax revenue annually for Loudoun County.

Given the economic incentives for private landowners of developing-out Dulles Cloud South, the DED also recommended instituting new restrictions and extracting concessions on this land, such as requiring:

  • Commitments to use 100% renewable energy to power the data centers
  • On-site renewable energy generation, as opposed to the usage of power purchase agreements (PPAs) to acquire renewable energy credits (RECs)
  • Adoption of, or preparation for, new energy technologies (e.g., hydrogen fuel cells or biogas)
  • Open space preservation, including increased screening and setback requirements to adjacent residences
  • Contributions to Loudoun County’s housing fund

Finally, Dulles Cloud South represents one of the few areas within Loudoun County where remaining large land parcels are available. Therefore, allowing data center use in Dulles Cloud South would alleviate development pressures in other areas of Loudoun County where continued interest in data center development remains.

Transportation and Land Use Committee (TLUC) Feedback

Ultimately, Loudoun County’s Transportation and Land Use Committee (TLUC) decided that data centers should not be developed in Dulles Cloud South. This decision was made for a variety of reasons including economic diversification, environmental impacts, power consumption, and to prevent data centers from being built in every part of Loudoun County. To this end, the TLUC made a motion to the Board of Supervisors, which carried 4-0-1, “to direct staff to not do any research on impacts and would not allow data centers in the identified area as Dulles Cloud South”.

Mary Zhang covers Data Centers for Dgtl Infra, including Equinix (NASDAQ: EQIX), Digital Realty (NYSE: DLR), CyrusOne (NASDAQ: CONE), and CoreSite Realty (NYSE: COR). Within Data Centers, Mary focuses on the sub-sectors of hyperscale, enterprise / colocation, cloud service providers, and edge computing.

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