If data centers are the lifeblood of American artificial intelligence computing, Loudoun County, Virginia is its main artery.
The rural county straddling Piedmont Virginia and the Washington Metropolitan area is home to 49 million square feet of data center infrastructure, making it the region with highest concentration of data centers in the world.
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Ashburn, within Loudoun, has an area known as “data center alley” because of its high concentration of the infrastructure that holds computing and IT equipment that powers the processing behind AI, host cloud services, and store data.
Loudoun County’s name-recognition and influence in the industry has helped attract data centers to other parts of Virginia, making it the state with the most data centers in the United States. Virginia has over 35% of the world’s hyperscale data centers, according to the Virginia Economic Development Partnership.
Understanding the development of data centers in Loudoun County is fundamental to understanding how so many data centers came to be in Virginia. Buddy Rizer, the executive director of Loudoun County’s Department of Economic Development, has been with the county since 2007 and helped build “data center alley” into what it is today.
“It was not an accident. We purposefully built this to grow our commercial tax base,” Rizer told the Washington Examiner. “I was in Seattle, meeting with Microsoft and Amazon. I was everywhere just trying to market Loudoun as a place for technology and digital infrastructure.”
Back to where it all started
In 1996, AOL built its headquarters in Loudoun County, bringing in tech talent and mobilizing other big tech companies to move to the Northern Virginia market. These companies relied on the MAE-East internet exchange point, which created a dense network of internet cable fibers for their systems and moved to Loudoun in 1998. But after the dot com bubble burst, many of these buildings sat vacant.
Loudon then began to rely on its homeowner tax base. The county was 81% financially dependent on residential real estate and only 19% dependent on commercial taxes when Rizer first began working for the county government. This did not bode well for the county when the housing market crashed and the financial crisis of 2008 hit American homeowners.
“When I arrived here, the county was struggling financially. We had been a victim of the dot com bubble in the early 2000s and we were suffering from the housing bubble burst in the mid-to-late 2000s,” Rizer said. “When the housing bubble burst, we had lost about a third of our tax revenue.”
The county Department of Economic Development set out on a mission to find the best way to grow its commercial tax base, bringing them back to the empty data centers from the dot com bubble burst.
“Through research and through opportunity, we landed on the idea that a lot of infrastructure, digital infrastructure, fiber, and some buildings were built and vacant because of the dot com bubble bursting,” Rizer said. “I thought if we could find a way to monetize that, that would be a good start.”
Rizer and the Economic Development team then began flying out to the West Coast, pitching Loudon as the spot for data center infrastructure development. DuPont Fabros and Equinix were some of the county’s earliest investors, Rizer said.
The proactive push for data center development in the county happened before the AI boom and catapulted Northern Virginia into a major profit surplus once AI companies already saw the region as the place to be.
The county has surged from its previous 19% commercial tax base, allowing them to lower the residential tax rate by 48 cents on the dollar, Rizer said.
“As we sit here today, we’re 51% commercial and 49% residential. It’s unprecedented,” Rizer said. “It saves the average homeowner about $3,800 a year. It’s also allowed us to invest in affordable housing, and roads, and schools.”
So, why Loudoun County and why Virginia?
The presence of the MAE-East internet exchange point, the dense internet fiber network, and the proactive regional government made Loudoun County stand out as a place for tech companies to invest in data centers. But, it wasn’t just Loudoun and it wasn’t just for these reasons.
The state passed a law in 2010 that allowed a retail sales and use tax exemption for companies on computer software and equipment purchases for data centers. The exemption requires an investment threshold and a certain number of jobs created from the facility. Rizer described the tax incentive as “incredibly important” in growing the number of data centers in Loudoun County and throughout the state.
Virginia is also where the first sub-Atlantic cable connections were wired to in the mid-Atlantic region, according to the Virginia Economic Development Partnership.
Loudoun’s neighboring Prince William County in Northern Virginia was also an early hot spot for the state’s data center draw, getting in on the action around 2012. Prince William, which hosts colocated campuses like Iron Mountain’s 142-acre data center campus, is planning to build one of the largest data center campuses in the world. A judge blocked the Prince William County Digital Gateway development in early August, but the county is planning to appeal the ruling.
Tech companies have developed data centers throughout the state, with more popping up in places like the Richmond Metropolitan Area. Google, which already has data center facilities in Loudoun and Prince William counties, recently announced plans to build a data center campus in Chesterfield County as part of a $9 billion investment in the state.
Amber Tillman, Google’s head of data center public affairs for North America, called Virginia an “undeniable leader in the digital economy” in a statement to the Washington Examiner.
“Virginia has become a top destination for data center investment due to a unique combination of factors, including strong fiber network, skilled workforce, and engaged leadership from communities across the state,” Tillman said.
She also pointed to the state’s decadeslong history in the industry and its college-educated workforce.
“Virginia’s universities and colleges not only produce a vast pipeline of tech talent but also foster a culture of innovation and forward-thinking problem-solving. This talent pool is vital for the continued growth of the industry,” Tillman said.
The state is also notably close to Washington, D.C., and its federal government decision-makers. It has a lot of rural, open space to build massive physical infrastructure projects. Virginia also has a relatively mild climate.
Loudoun County has a reclaimed water line that, according to Rizer, is also a draw for data center manufacturers, as it is a more sustainable way of cooling system cores.
Development not without controversy
The massive boom in data centers across the state after the AI explosion in the past decade has caused Virginia residents to pay close attention to the impacts the industry has on their power grids, water supply, and general aesthetics of their communities.
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“I don’t know that anyone could have predicted that the technology would take off the way it did and that the digital infrastructure would be so important.” Rizer said, noting it’s now not a matter of “if” data centers, but “where” data centers will exist.
“We have tried to be very responsive. I think that we have made a lot of adjustments at the legislative level. There are no more data centers by right,” he said.
He said the county also has one-third of its centers running on reclaimed water, and more are progressively switching to air cooling, the eco-friendlier way of core system cooling.
“We have learned how to do a better job. It’s true– we have data centers that are probably not where we would want them if we were to do it again. We have data centers that are too close to homes. We have homes that are built too close to data centers,” Rizer said. “We’ve learned and we’ve adapted and continue to do so.”
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One of the next frontiers for Virginia is protecting rate payers when it comes to the utility cost that data center expansion brings. Environmental groups like the Piedmont Environmental Council have presented arguments to the state about the importance of protecting state residents from paying data centers’ energy shares.
“Protecting that rate payers is very important. The county and the industry– I think we’re all agreed that legislation needs to be put in place that protects the rate payers. If the data centers need new infrastructure, they should be paying that share,” Rizer said.