The Northern Virginia Data Center Market

The Northern Virginia Data Center Market

Northern Virginia is the largest data center market in the United States. This extremely mature and well-connected area traces its roots to the U.S. Government's experiments in wide area fiber optic networking in the late 1960s. The low-latency connections to the national fiber network backbone along with a relatively business-friendly environment make Northern Virginia the top market for data centers serving the area's biggest public and private enterprises.

While government agency requirements have increased the data center demand in Northern Virginia, the majority of the market is made up of other industries finding the market attractive. Aerospace, financial, managed hosting, technology, and telecommunications companies have all staked claims in Northern Virginia's data centers. Colocation requirements in the Northern Virginia market are typically larger than most markets.

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Power Overview

To meet the voracious demand for data centers, the entire Northern Virginia area has experienced uncommonly-rapid growth of new electricity providers. According to published reports, Virginia has the lowest commercial electricity rates in the Mid-Atlantic region. Virginia does not provide a wholly-competitive electricity market, but local regulators enable co-ops such as the Northern Virginia Electric Cooperative (NOVEC) to resell service from monopoly provider Dominion Energy—doing business as "Virginia Electric & Power." Therefore, the Virginia Electric & Power Company and NOVEC do not compete on price but rather on customer service offerings.

Connectivity Overview

An astounding 70 percent of the world's Internet traffic flows through Northern Virginia. The region's proximity to every federal government agency's headquarters obviously plays a role in that world-class network connectivity. As a result, the area's robust technology and financial businesses grew up around that connectivity. Hundreds of thousands of fiber miles laid by dozens of providers enable robust carrier-neutral broadband connectivity to many of the region's data centers.

Hazard Risk Overview

The Northern Virginia market is at low overall risk for natural disasters. Northern Virginia is far enough inland to avoid the full force of hurricanes, but does feel the impact of these storms' remnants. While not an annual occurrence, large storms (called "nor'easters") can strike the region with enough rain, snow, and ice to cause power outages and impede traffic. Earthquakes are rare in Virginia, with almost no significant activity in the past 50 years.

Northern Virginia DATA CENTER MARKET OPTIONS

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