Market Overview

Key Developments

Sprawl Continues, but Q4 was all about Core Ashburn

Activity in Northern Virginia remains focused on site selection, with Dominion enhancing its transmission network and providers migrating south toward Henrico County. Limited space and power in core Ashburn persist, driven by hyperscale demand and AI developments.

Community concerns about data center projects are growing. In Leesburg, the Greenlin Park project, initially approved by the Planning Commission in July 2024, was restructured after a September public hearing. A planned November vote was postponed by JK Land Holdings. In Prince William County, Stack Infrastructure’s project outside the Data Center Overlay District faces delays, with no new review date set, raising questions about local support. In Mecklenburg County, TecFusions postponed its expansion to January 2025 due to rezoning needs and community awareness issues.

Land acquisition for new projects continues. Iron Mountain purchased 40 acres in Manassas for two data centers with 150 MW of power. Avaio Digital Partners secured 452 acres in Appomattox County for a $3 billion campus, boasting 300 MW of power, though timelines are uncertain.

4Q 2024 Northern Virginia Development Activity:

• JK Land Holdings postpones vote to rezone 81 acres to industrial park for a 2.1 million SF data center and substation between Sycolin Road and Dulles Greenway; a replacement meeting date has not yet been set
• Yondr officially launches first 48 MW of data center on campus in Loudoun County. The second phase, also 48 MW, is currently being constructed at the site
• Iron Mountain purchases 40-acre property in Manassas for $113,500,000. Iron Mountain plans to build 2 buildings totaling 150 MW and an on-site substation. ($2,846,124/acre)
• Avaio Digital Partners is planning 300 MW+ data center campus on a 452-acre site at 7561 Richmond Highway, Appomattox, VA

Key Developments

Pacific Gas and Electric receives $15 billion loan for grid improvements

The recent boom in data center demand has caused strain on utility providers everywhere. The strain ranges from electricity generation to transmission and distribution. Additional infrastructure needs to be built, and aging infrastructure needs to be replaced. Pacific Gas & Electric Company, a California utility is awarded a $15 billion loan to draw from and make such improvements. Hydropower generation will be increased as will battery energy storage capacity. Upgrading of transmission capacity will also take place from these funds. The funds come from the Energy Infrastructure Reinvestment project at the US Department of Energy’s Loan Programs Office.

4Q 2024 Northern California Development Activity:

• Prime files application for second building at Sacramento campus in McClellan Business Park. The 2-story building is planned to have 18 MW of IT power.
• A Mitigated Negative Declaration is filed for 1977 Saturn Data Center project with CEQA to build a 1-story data center and substation. The project is tied to StratCap who was acquired by HMC Capital early 2024.

Key Developments

Los Angeles market gains traction

After many years with little to no new projects active simultaneously, growth in Los Angeles has picked up. In the city of Vernon, just south of downtown Los Angeles, Coresite and Goodman both own properties on E. Vernon Avenue where data centers are currently being planned. Not far from Coresite’s new purchase, Prime finalized construction on their fully preleased facility. In Downtown LA, Digital Realty brings additional capacity online at LAX10 as plans move forward for LAX13. Also downtown, GI Partners 15 MW expansion into additional floors at One Wilshire progresses.

4Q 2024 Los Angeles Development Activity:

• Prime completes construction of LAX01-01, a three-story, 33 MW facility at 4701 South Santa Fe Avenue. The facility is fully leased between 2 tenants
• CoreSite purchases 7.05-acre industrial site in Vernon for redevelopment. 1925 and 1936 E Vernon Avenue sold for $61,500,000 ($8,723,404/acre)
• Digital Realty files Notice of Preparation of Environmental Impact Report for planned facility at 727 S. Grand Avenue, Los Angeles. Public comment period is currently ongoing

Key Developments

Canada Commits to AI Growth

The Canadian federal government launched an initiative to fund public supercomputing infrastructure and make computing power available for Canadian AI researchers and companies, named the Canadian Sovereign AI Compute Strategy. This strategy includes CA$1.3 billion for computing infrastructure and CA$700 million for AI enabled data centers. Toronto-based AI startup Cohere receives the first commitment from the Strategic Innovation Fund in the amount of CA$240 million. Cohere is partnering with CoreWeave, an American company, to build a multibillion-dollar AI data center. The exact location for this data center has not been specified at this time.

4Q 2024 Toronto Development Activity:

• London-based data center developer and operator, Yondr is developing a 3-story, 27 MW facility at 3125 Steeles Avenue East in Markham, ON. Facility is expected to be ready for service mid-2026

Key Developments

Elevated demand driving pre-leasing prior to planning approval

Hyperscale providers continue to drive pre-leasing activity, often on entire planned campus developments. An emerging trend, however, is that many of these campuses are reserved ahead of planning consent, with options for contract cancellation if approval is not received. AI workload demands continue to hamper construction start dates as liquid cooling designs are re-assessed, both from a design and capacity planning perspective. Further afield, Microsoft has announced plans to invest €3.2B in developing a new cloud region in the Rhein-Erft district, west of Cologne.

4Q 2024 Frankfurt Development Activity:

• IBM has launched its second quantum data center in Ehningen, Germany, featuring three systems, including one with its 156-qubit Heron processor, accessible via IBM's cloud service
• Goodman Group received approval to build a 100MW data center, FRA02, in Neu-Isenburg near Frankfurt
• Envia Tel is expanding its Leipzig 2 data center, adding 1,000 sqm to accommodate 20,000 more servers. Commissioning planned for summer 2025
• euNetworks has launched a new long-haul fiber route connecting Frankfurt and Paris, designed to meet growing bandwidth demand between these major European data center hubs
• Yondr Group has completed the first 20MW phase of its 40MW hyperscale data center in Bischofsheim, near Frankfurt
• Rheinbahn, Düsseldorf's public transport operator, plans to build a five-story data center at its Lierenfelder Straße premises
• NorthC Datacenters is expanding its footprint in Frankfurt, with plans for a second data center in Frankfurt. The new facility will offer 1.5 MW in Phase 1, scaling up to a total of 10.5 MW

Key Developments

Japanese authorities signal that nuclear energy is no longer to be minimized in its long term energy planning

Recent developments in the nuclear power industry have positive implications for future power generation nationwide. In November, NE Japan restarted the 825 MW Onagawa No. 2 nuclear reactor, the first Boiling Water Reactor (BWR) to resume operation since the Fukushima Daiichi disaster 13 years ago. This brings the total number of operational reactors to 13 out of 54 pre-accident.

In December, the government released a draft update to its Strategic Energy Plan, dropping its prior commitment to minimizing nuclear dependence. The draft advocates for developing "next-generation advanced reactors," with the finalized plan expected by March 2025.

Osaka’s growing appeal as a development hub

Osaka is gaining traction as an alternative to Tokyo for development, offering easier power access and more sites. Companies like SoftBank and KDDI are investing in AI data center infrastructure, boosting Osaka's appeal.

4Q 2024 Osaka Development Activity:

• Ares Management acquired GLP Capital Partners' international business (excluding Greater China) to meet growing hyperscale and enterprise data center demand
• DigitalBridge purchased a majority stake in JTower for JPY70.1 billion (US$466 million) and plans to privatize the company
• NTT Data selected Oracle Alloy to enhance sovereign cloud services in Japan
• SoftBank, GMO Internet Group, KDDI, and other cloud providers are deploying Nvidia AI infrastructure
• KDDI signed an MoU with Sharp Corporation to acquire and convert a former Osaka manufacturing plant into an AI-ready data center