DuPont Fabros in Northern Virginia – Past, Present, and Future
There are several companies in the data center industry that have had success due to impactful decisions they made early on. At datacenterHawk, we've examined some of the different companies and the decisions that they've made in order to tell a story of how they gained success. For our first blog, we took a look at the past, present, and future of DuPont Fabros and their decision to invest heavily in Northern Virginia.
Being in the right place at the right moment has its advantages. DuPont Fabros (DFT) found this out in its first two decades. Headquartered in Washington, DC, the company was one of the first to build and offer data center capacity in Northern Virginia, which as of 2017, has become the United States’ largest data center market.
The Northern Virginia area is prime country for data center construction for a variety of reasons. Considered a low-risk, easy-to-travel-to area, offering cheap and reliable power from Dominion Electric and attractive tax incentive programs, Northern Virginia is also a connectivity hub with massive amounts of available fiber. In particular, the MAE East facility in Loudoun County is a crosspoint for approximately 70% of the world's Internet traffic.
As a local REIT with ties to the area, DFT was well-positioned to be one of the leaders in the data center building boom that kicked off in Northern Virginia in 2006. They have since established themselves as a successful wholesale provider in Ashburn, Virginia's "Data Center Alley."
DuPont Fabros was founded in 1997 as a commercial development company by Lammot J. du Pont and Hossein Fateh. In 2000, the founders decided to focus on building and developing data centers. The company was one of the first to categorize data centers as real estate, offering customers long-term leases instead of short-term license agreements. In 2007, the company rebranded as DuPont Fabros Technology, and filed for its IPO as a REIT. It now trades on the New York Stock Exchange under the DFT symbol.
In 2000 DFT purchased a 138-acre tract of land in Ashburn, Virginia that would become Ashburn Corporate Center (ACC), its flagship data center campus (multiple facilities within close proximity of one another). The company opened its first facility, designated as ACC2, on the campus in 2001, with completed the build out by 2005. A second facility, ACC3, was also opened in 2005, and a third facility, ACC4, followed in 2006. These initial builds provided DFT a "head start" in Northern Virginia, allowing them to capture demand from companies wanting to establish data center requirements on the east coast.
During the financial crisis of 2008, DFT hit a snag in trying to obtain a new $300 million building loan, when several potential lenders, including Lehman Bros., either merged or went out of business. The company's stock took a major hit, dropping to under $2 per share, and construction was temporarily halted on the ACC5 data center in Ashburn, as well as several other DFT facilities.
But within four months, DFT had restructured its debt, and secured new financing of $330 million. The company's stock bounced back, soaring more than 200% in 2009, buoyed by pre-leases for ACC5, which opened in the fall of that year.
With its next two Northern Virginia data centers, DFT entered the "super wholesale" market, building mega-sized facilities to attract clients who might normally build, own and operate their own data centers. DFT's ACC6 facility opened in 2011, offering 130,000 sq. ft. of data center space and 26.0 MW of commissioned power.
Its next facility doubled that achievement. Opened in 2014, DFT's ACC7 facility is one of the largest individual data center buildings in North America, offering 238,000 sq. ft. of data center space and 41.6 MW of commissioned power, with an industry-low PUE of 1.15 at full capacity.
With ACC7, DFT transitioned to a more energy-efficient data center design, utilizing a hard floor environment with hot-aisle containment and an evaporative cooling plant using recycled water. ACC7's medium-voltage (4,160V) distribution and isolated-parallel UPS topology allowed DFT to provide flexible cabinet layouts and power densities (up to 2.9 MW) in the facility's 28 computer rooms. Also, ACC7's "modular" design allowed DFT to gradually build out additional capacity in 5.9 MW units, while also giving customers the option to expand by adding server-filled containers outside the ACC7 building.
At this time, DFT is under construction with ACC9, its seventh facility in Ashburn. The new facility is located across the street from the main ACC campus, on an additional 44 acres of land that DFT purchased in 2015. DuPont will deliver the first phase of ACC9, 14.4 MW of commissioned power in 2Q (of which is partially leased), with the additional 14.4 MW delivery taking place in 3Q 2017. ACC9 will offer 180,000 sq. ft. of data center space when fully constructed, with flexible room sizes and load densities available to customers.
DFT's Ashburn portfolio is currently the third-largest data center campus in the world, with a total of 164.7 MW of commissioned power (not including the yet-to-be-opened ACC9 facility). Additionally, DFT has two offsite data centers, one in Reston, VA (dubbed VA3, it has 147,000 sq. ft., and 13 MW), and one in Gainesville, VA (VA4, 90,000 sq. ft., 9.6 MW), which was purchased from AOL in 2005.
DFT's six operational ACC facilities are now fully occupied, mostly by high-profile strategic cloud or webscale customers such as Microsoft, Rackspace, and Facebook, which approximately leases over 40 MW at Ashburn. In 2015, DFT's second-largest client, Yahoo, pulled its servers out of ACC2 and moved them to its own private data centers, but DFT was able to quickly re-lease the facility to an existing client.
In 2017, DFT will continue to build on its highly-successful wholesale model, with active development in Virginia. The company is already developing a speculative shell for its ACC10 facility (27.0 MW and 130,000 SF of data center capacity), hoping to attract a hyperscale cloud client or high-profile built-to-suit. In addition, DFT has land available to construct two new data centers, ACC8 and ACC11. These two facilities will add up to 26.4 MW and 130,000 SF of data center capacity.
DFT also recognizes the importance of keeping its current customers. It is negotiating with Facebook to extend leases that expire in 2018, in four facilities on the Ashburn campus. Even if Facebook decides to shift infrastructure, DFT looks to be profitable for some time to come, thanks to the continued ongoing demand power, space and bandwidth in the Northern Virginia market.