Loudoun County, Virginia, has held the world’s greatest concentration of data centers for decades now, is now grappling with the fact that it could lose to rivals across the country.
Before data centers became an asset class, developers flocked to build their centers in Loudoun County. Loudoun, which opted to trade farmland for computing warehouses during the tech wave of the 1990s, has gone to great lengths to make data centers easier to build. From expediting the approval process, sponsoring local workforce development initiatives, and even constructing a recycled water cooling system for facilities to use, Loudoun County has chased the data center tax revenue windfall. But those loose boundaries will tighten as local officials look to restrict new developments.
A growing awareness amongst residents and elected officials that data center build outs have dramatically altered the local landscape have prompted this change of heart. In 2019, alone, Loudoun’s data center space expanded from 14.7 million square feet to 23.5 million square feet. This insane level of growth is consuming the available land, which limits places for new data centers to develop and the local official’s willingness to accommodate new development.
Land value is only a small element of the economic equation for data centers, unlike an office building or a multifamily construction. Data center developers can easily overpay for a property, which has driven up land costs to the point where other sorts of development are a pipe dream in Loudoun. That’s not just because data centers have outpriced the area. From the perspective of a city planner, data centers threaten the potential for other businesses in the area. The sheer amount of electrical energy that data centers devour and the greenhouse gasses they emit are not only ecologically harmful, they are generally unsafe to be left smack-dab in the middle of a commercial area.
Loudoun County’s overzealous desire for data center development has shoved them between a rock and a hard place. On one hand, data centers provide the most tax revenue per square foot to the county (by a long shot), but on the other, allowing data center development to continue to gobble the lion’s share of the land in the area forces Loudoun to put all of their eggs into one economic basket. For now, the County may be in for a headache for their short-term financial planning as data center developers are beginning to look outside of Loudoun to construct new buildings.