Virginia boasts a growing data center industry. Many organizations are attracted by local connectivity resources and data center tax incentives. CyrusOne recently joined the booming Virginia data center sector with the purchase of a 14.34-acre site which will soon begin construction.
The Washington Business Journal reported that the company plans to build a 254,000 square foot data center on the property, which it purchased for $6.87 million just before the end of 2013. Full details of CyrusOne’s project have not yet been made public, however, administrators did request a pre-proposal meeting to talk about a potential zoning amendment and special exception which would allow them to construct a multi-building data center campus.
Although the organization has not yet come forward with a full announcement of their plans, the news will mostly likely come with the release of the company’s fourth quarter earnings later this month.
Virginia Data Center Construction Continues
Data center developer Digital Realty also has plans in the works to grow its Virginia service footprint with the addition of 280,000 square feet of space. Currently, the company boasts 2.4 million square feet of space in Northern Virginia, and has already began construction of a new structure at its Ashburn data center campus.
David Caron, Digital Realty senior vice president of portfolio management, said that increasing customer demands prompted the planned expansion, as well as the fact that the region is an attractive market to invest in.
“It is estimated that three quarters of the world’s Internet traffic flows through Loudoun County data centers every day,” Caron said.
Buddy Rizer, Loudoun County economic development director, said the region has had data center construction in progress on a daily basis for the past five years. With CyrusOne’s and Digital Realty’s projects in the works, this will continue the trend into the future.
The state provides several data center tax incentives for businesses that locate their facilities in the famed “Data Center Alley.” State officials first provided tax breaks to data center developers in 2008 and later amended the benefits in 2012. Businesses leveraging the incentives can take advantage of a 100 percent sales tax exemption on computing, mechanical and electrical equipment.
Additionally, due to recent amendments, facility owners and tenants are now considered data center users and can qualify for additional incentives as well. However, businesses looking to gain these benefits must invest at least $150 million in capital and create 50 new jobs in the state.
The state benefits from these tax breaks as well, as the Journal noted that the tax on computing equipment earned Loudoun County $42 million in 2011, another $51 million in 2012 and approximately $60 million last year. State and county officials are also considering further tax incentives, including a personal property tax rate reduction that was first proposed in October last year.
Currently, certain property types like aircraft, construction machinery and satellite manufacturing sites can qualify for discounted personal property tax rates. If data center facilities are added, the state’s Data Center Alley could experience explosive growth in the future.