Northern Virginia data center industry faces supply and demand imbalance, report finds – WTOP News

Northern Virginia in the first half of 2023 remained the world’s largest market for data centers, but development is beginning to migrate south, as fewer optimal sites remain in Loudoun and Prince William counties.

Many of the industry’s major and secondary markets, including Northern Virginia, have reached a state of supply and demand imbalance where the current and near-term supply of available land for development is not capable of satisfying demand, according to a recent report from Chicago-based real estate agency Jones Lang LaSalle Incorporated (JLL).

The report shows Northern Virginia’s land vacancy rate is down to less than 2%, resulting in a spike in pricing.

Still, the region continues to have substantially more active data centers than the industry’s other leading markets, which include northern California, Chicago and the Dallas-Fort Worth area.

Northern Virginia in the first half of this year also had the second-largest amount of land under construction for data centers, followed by northern California, whose industry growth is driven largely by increased artificial intelligence and cloud computing demands. In Northern Virginia, cloud computing for companies like Amazon remains the top use of the region’s data centers.

Phoenix and the country’s Northwest region outpaced Northern Virginia as the leaders in energy absorption in the first half of 2023, according to the report.

Energy absorption is slightly off record levels in Northern Virginia, but the report noted that Dominion Energy is working to address power constraints. Those efforts include working to get approval of a transmission line and switching station to fuel a data center in Prince William County’s Innovation Park area.

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