Microsoft Is Expanding Its Virginia Data Center Footprint, But Not in Ashburn

Microsoft is once again expanding its already enormous data center campus in Boydton, a town in southern Virginia.

The office of Virginia Governor Ralph Northam announced the company’s plans Thursday, saying it will “inject significant capital investment” in what will be its sixth expansion at the site, which has been operational since 2010.

Cloud giants including Microsoft have been spending billions of dollars each quarter in recent years on expanding data center infrastructure for their platforms. In Virginia, most of this construction activity has taken place in and around Ashburn – some 230 miles north of Boydton.

Northern Virginia is the world’s largest and fastest-growing data center market, and Microsoft has substantial presence there. But big cloud providers usually have multiple data center locations serving every major geographic area, spread apart to provide backup for each other. Microsoft’s Azure cloud has three availability regions in Virginia, two for the private sector and one that exclusively serves government clients.

Azure US East 2 availability region is hosted on the Microsoft data center campus in Boydton, according to datacenterHawk.

In statements, Northam and other state, local, and federal officials touted economic development benefits Microsoft’s presence has brought to the area. The company created 300 jobs in Mecklenburg County (where Boydton is located), according to the governor’s office. The planned expansion is expected to create 100 more.

As with its past construction projects at the site, Microsoft is eligible for tax breaks for the latest expansion. It will be able to apply the state’s Data Center Sales and Use tax exemptions to computing equipment and software it buys to fill the new space with.

Even though Microsoft’s data center campus has been in Boydton since 2010, according to Northam’s office, Virginia competed for the expansion project with multiple states, which appears to be an explanation for the tax breaks.

Virginia’s sales and use tax exemptions for data centers accounted for about $80 million in uncollected state revenue in fiscal 2018, according to the Associated Press.

Microsoft’s initial investment to build the data center campus in 2010 was nearly $500 million. Including the previous expansion, a $250 million project announced in 2016, the company has invested about $2 billion in building out the campus over the years, Richmond Times-Dispatch estimated.