Report: Microsoft and Oracle Gobble Up Data Center Space in Virginia

If you have been keeping an eye on the wholesale data center market in the US – that’s the market for big facilities leased to companies many megawatts (sometimes tens of megawatts) at a time – you know that the biggest cloud providers have been taking down space in top markets at a rapid pace.

While this is happening in a number of places, including Silicon Valley, Dallas, and Chicago, the Northern Virginia data center market has been seeing more action than others, and the latest report from a commercial real estate firm that tracks data center markets shows that the action isn’t letting up in the area west of Washington, DC.

Only two companies, however, were responsible for most of the action in Northern Virginia during the second quarter: Microsoft and Oracle. Both grew enormously in the past by selling software licenses, and both are now racing to expand their cloud services to compensate for shrinking software revenues, which are shrinking because of competition from other cloud providers.

Microsoft is ahead of Oracle in this race, and its cloud business is second only to Amazon Web Services, according to market analysts. The race has been accompanied by massive spending on data center construction and leasing.

Read more: Top Cloud Providers Made $11B on IaaS in 2015, but It’s Only the Beginning

Collectively, the two companies either signed or were close to signing data center leases with multiple data center providers totaling 55MW of capacity in Northern Virginia over the last 30 days, according to the latest report by North American Data Centers, a real estate firm that specializes in helping companies find data center space and negotiate leases.

Microsoft is responsible for about 30MW of that capacity, while Oracle is responsible for the rest, Jim Kerrigan, the firm’s managing principal and the report’s author, said in an interview with Data Center Knowledge. Not all of those leases had been signed as of Thursday, he cautioned.

Both Microsoft and Oracle were also among companies that signed some of the biggest single-transaction data center leases last year.

Microsoft signed at least three wholesale leases in 2015 – in Silicon Valley, Chicago, and Northern Virginia data center markets – totaling about 28MW of capacity, according to NADC’s annual report published in January. Oracle signed two deals, 5.5MW and 4.5MW in Chicago and Northern Virginia markets, respectively, the report said.

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