CyrusOne Buys Land for Data Center in Northern Virginia

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CyrusOne's Phoenix data center is one of the  newer locations for the fast-growing data center company, which has now bought land in northern Virginia. (Photo: CyrusOne)

CyrusOne has bought land in northern Virginia to build an East Coast campus for its growing national data center network. The company has purchased a 14.3-acre site in Sterling (near the Dulles Town Square mall) for $6.87 million, according to property records. The transaction was first reported in the Washington Business Journal.

CyrusOne has a well-established footprint across the country, with more than 1 million square feet of space available in 20 data centers concentrated in Texas, Ohio and Phoenix. The missing piece in its footprint has been an East Coast presence, and the data center cluster in Northern Virginia seemed a natural destination. The company plans on building a 254,000 square foot data center, and has requested a meeting with Loudoun County planners to discuss a zoning amendment to support a multi-building data center project.

The company is in a quiet period until its earnings release scheduled for February 20th. Today it announced a ground breaking ceremony for its San Antonio expansion later this week.

A Competitive Landscape

CyrusOne has a big impact on the competitive landscape. It is yet another data center giant vying for the lucrative northern Virginia business. Director of Economic Development in Loudoun Buddy Rizer has stated on numerous occasions that there hasn’t been a day in five years that hasn’t seen data center construction.

The CyrusOne land purchase exemplifies the continuing growth of the Loudoun data center cluster. Several factors make the area attractive. Power costs are low with Dominion Power very accommodating to the data center sector. The connectivity is rich, as the very foundations of the Internet were formed here with major companies like AOL and Equinix setting up shop in Northern Virginia in the 1990s. Additionally, tax incentives are extremely friendly in Virginia.

Loudoun County was home to a staggering 5 million square feet of data center space as of 2012. The numerous expansions since and ongoing, as well as the introduction of another data center giant suggests that the number is now a low ball estimate. Loudoun loves data centers; it is the cornerstone to the economy, outpacing growth in all areas of real estate.

Major Investments in New Space

Dupont Fabros is investing $900 million in Ashburn, citing tax incentives as one reason for the commitment (the other being demand). Before the NTT investment, RagingWire secured $230 million,  which in part is being used for expansion here in NoVa. Digital Realty has been aggressively expanding in Ashburn, planning to invest $150 million through 2015 on an additional 400,000 square feet. Equinix has built out a connectivity hub of massive proportions. CoreSiteCOPT, Latisys, CenturyLink Technology, Verizon Business and AT&T also operate data centers in Northern Virginia.

Continuing deal announcements, alongside of expansion announcements, suggest that there is room for CyrusOne to grow here. Its strength among financials in particular mean it will be real competition for many down the line. The company is also making a major commitment to the Open-IX initiative, which has recently begun operations at several sites in the region.