Developers acquire what remains of former AOL campus — and plan $1B in new projects

WBJ

By Tristan Navera

A joint venture of developers with significant Greater Washington portfolios said they will invest $1 billion in new Loudoun County data centers, including on a newly acquired plot that was the last vestige of America Online's famed campus during its dot-com heyday.

American Real Estate Partners of Tysons and Chicago investment firm Harrison Street, who have teamed up before on data center projects, announced Wednesday that they will build six data centers totaling 2.1 million square feet on three sites in Ashburn and Arcola, among them a portion of the former AOL headquarters on Pacific Boulevard in Ashburn's data center alley.

The AOL property will be the largest — that site will host four data centers ranging from 265,000 to 440,000 square feet, which will be developed build-to-suit for hyperscale tenants and deliver 300 megawatts of electrical capacity. Data center developments are commonly measured by their electrical output.

Pacific Ashburn Campus LLC acquired the 43.3 acres bounded by Pacific Boulevard, Waxpool Road and Broderick Drive for $136 million in a deal that closed Dec. 21, according to Loudoun County property records. The sellers were Yahoo Inc. and Oath, what became the new umbrella brand for both AOL and Yahoo after Verizon Communications Inc. (NYSE: VZ) had acquired both in the last decade.

Indeed, this plot appears to be what was left of the former AOL campus, which had been sold off piece by piece following the company's headquarters shift to New York City in 2007 and its $4.4 billion sale to Verizon in 2015. Verizon since agreed to sell off its media group, including both Oath and Yahoo, to private equity firm Apollo Global Management last year for $5 billion.

The Arcola campus, on Arcola Boulevard across from Google's new data center development and close to Dulles International Airport, will host another two data centers totaling 100 to 126 megawatts of capacity. This land was acquired in October, the developers said, though a price has not been posted on the Loudoun County property website.

In the meantime, the venture has begun work on its first data center, the 265,000-square-foot ABX-1 at Beaumeade on Loudoun County Parkway, which was acquired last year for $21.5 million.

That investment had marked the entry into Northern Virginia's fast-growing data center market for AREP, which is best known locally as a developer of offices and mixed-use developments — its portfolio includes the likes of Rosslyn City Center, South Lakes at Dulles Corner in Herndon, Carlyle Center in Alexandria and Highline at Greensboro District in Tysons. This latest announcement in Loudoun effectively cements the new business line for AREP, which cited the "robust fiber network, low energy costs for tenants and landlords and local incentives for organizations investing capital and creating jobs" in Northern Virginia.

"We are creating not just exponentially more data but new and ever more useful ways to apply that data," Doug Fleit, AREP’s CEO, said in a statement. "All of this speaks to a long-term data center trend for markets like Ashburn.”

Harrison Street, meanwhile, is a frequent financier in data center development — since 2018, it has invested about $2.4 billion. This acquisition adds to its investments in an area with good network connectivity and a lot of scalability, Michael Hochanadel, the firm's managing director and head of digital real estate, said in a statement. That includes Summit Infrastructure Group, which it acquired in July and counts 600 miles of dark fiber infrastructure in Northern Virginia.