January 12, 2022BusinessWire
Transaction Includes 1.2 Million Sq. Ft. Development Site in Ashburn, VA, the World’s Largest and Most Connected Data Center Market
Builds on AREP’s and Harrison Street’s JV to Develop and Operate World-Class Data Centers
CHICAGO, January 12, 2022--(BUSINESS WIRE)--A joint venture between American Real Estate Partners (“AREP”), an institutional fund manager and innovative operating partner focused on data center, office, and residential/mixed-use development and repositioning throughout the Eastern United States, and Harrison Street, one of the leading investment management firms exclusively focused on alternative real assets, (the “JV”) today announced a $1 billion commitment to develop six powered shell data centers representing 2.1 million square feet of data center space in Data Center Alley, the world’s largest and most connected data center submarket, located in Ashburn and Arcola, Virginia.
The data center campuses can accommodate six buildings that will range from 265,000 to 440,000 square feet in size and includes the site of the former AOL headquarters, currently operated by Yahoo, located on Pacific Boulevard in Ashburn. Once complete, the Ashburn campus will be comprised of four state-of-the-art powered shell data centers developed in a build-to-suit model for hyperscale tenants and deliver 300 MW of electrical power capacity. The Arcola campus is located on Arcola Boulevard, directly across the street from Google’s new development, and near Dulles International Airport. The Arcola development will include two modern powered shell build-to-suit data centers with approximately 100-125 MW of capacity.
The JV has already broken ground on its first development, ABX-1 at Beaumeade, a 265,000 square foot two-story powered shell located directly on Loudoun County Parkway, directly on top of the Ashburn Fiber Ring. AREP and Harrison Street acquired the site in January 2021. “Speed to market is a key factor that attracts the most demanding hyper scale tenants today,” said Greg Rowles, AREP’s Managing Director of Development.
The Northern Virginia data center submarket features a robust fiber network, low energy costs for tenants and landlords, and local incentives for organizations investing capital and creating jobs and is home to the largest concentration of data centers in the world. It has also been the fastest growing data center market for the past five years with increasing demand due to available power and one of the most connected markets in the U.S.
“The demand for more data centers is simply based upon our society’s move to an even more integral life with technology,” said Doug Fleit, AREP’s Chief Executive Officer. “Every aspect of our lives is changing whether it is more connectivity with 5G and more robust streaming entertainment and communications, the inclusion of new augmented reality applications like Meta, self-driving cars and an endless evolution of new technologies and applications. We are creating not just exponentially more data but new and ever more useful ways to apply that data. All of this speaks to a long term data center trend for markets like Ashburn, Virginia.”
“Digital real estate is a core pillar of Harrison Street’s demographically driven investment strategy, and we are thrilled to significantly expand our presence in the world’s most active data center market,” said Michael Hochanadel, Managing Director and Head of Digital Real Estate at Harrison Street. “This transaction, in partnership with AREP, provides us with unique data center campuses and immediate scale in an attractive network-dense region ensuring hyperscale cloud providers and high-quality colocation operators have the capacity they need to support their customers. We look forward to working closely with AREP as we seek to identify strong data center investment opportunities in the region going forward.”
“As demand for data centers continues to far outstrip current capacity, AREP is focused on developing assets that expand data availability and connectivity. Since partnering with Harrison Street in January 2021, we have executed on our commitment to acquire powered shell assets at scale for large cloud providers and colocation users in the Northern Virginia market that can be configured to best suit tenants’ power density and service needs,” added Mr. Fleit.
Since 2018, Harrison Street has invested approximately $2.4 billion in digital assets including powered shells, carrier hotels, strategic colocations and dark fiber, and has built a dedicated team committed to investing across verticals that are key parts of the digital ecosystem. In July 2021, Harrison Street acquired a significant minority interest in Summit Infrastructure Group (“SummitIG”), the leading dark fiber network solutions and bandwidth infrastructure provider for carriers, content providers, data center operators, large enterprises and government agencies, with more than 600 miles of 100% underground, newly constructed metro and regional dark fiber infrastructure in Northern Virginia.
AREP has had a number of high-profile successes in the Ashburn market that including the 1.8 million square foot acquisition of Quantum Park and the development of a 445,000 square foot headquarters for the U.S. Customs and Border Patrol Agency.