Market Overview

Key Developments

Record Land Prices Signal Infrastructure Scarcity as Northern Virginia Markets Matures

Northern Virginia's land market has reached unprecedented price levels, with transactions exceeding $950,000 per acre as infrastructure constraints force developers to compete for sites with secured power and utility access. As a result, site selection now prioritizes power availability over traditional proximity advantages, with developers securing multi-decade utility commitments to justify premium land investments. Developers are responding to extended power delivery timelines from Dominion Energy by acquiring larger parcels that can accommodate multiple phases and dedicated substations, fundamentally changing the development model from single-facility projects to campus-scale infrastructure. Virginia's new rate structure for large-load users, requiring 14-year contracts with minimum demand charges and exit fees, further reinforces this shift toward long-term infrastructure commitments. While Northern Virginia has historically attracted development through connectivity advantages, the market now competes primarily on power infrastructure capacity, with land prices reflecting the premium for sites that can deliver immediate utility access in the world's largest data center market.

4Q 2025 Northern Virginia Development Activity

• Amazon has acquired the 270-acre Devlin Technology Park site in Prince William County, Virginia, for a record-breaking $700M from Stanley Martin Homes, equating to about $3.7M per acre
• Silver District Capital sold 92 acres of land in Leesburg, Virginia, for a record-breaking $152M, or $1.65M per acre, to an undisclosed buyer
• Land disturbance and construction on the Prince William Digital Gateway project was halted. This underscores escalating regulatory hurdles in Northern Virginia’s data center hotspot, potentially delaying AI infrastructure growth

Key Developments

Los Angeles Development Shifts to Suburban Markets as City Constraints Drive Geographic Expansion

Data center development in Los Angeles is increasingly shifting to suburban areas, as limited power, scarce land, and lengthy permitting processes restrict growth within the city. This trend continued in Q4 2025, with Digital Realty purchasing 5.4 acres in Vernon for $48.8 million. Goodman Group broke ground on their development earlier in the year, and DigiCo REIT is advancing plans for a campus in Monterey Park. The development pipeline now reflects a clear move away from downtown and central Los Angeles. Developers are targeting sites in Vernon, Monterey Park, and other nearby municipalities that offer reliable power and more predictable approval processes. While development has historically concentrated within the city to serve the entertainment sector and downtown financial district, most new projects now occur in peripheral markets that balance proximity to demand centers with operational feasibility. This shift represents a strategic recalibration, with operators prioritizing deliverable capacity over urban location premiums. Los Angeles demonstrates how even major metropolitan markets adjust development geography when infrastructure constraints outweigh location advantages, creating suburban corridors that support scalable growth.

4Q 2025 Los Angeles Market Activity:

• Digital Realty purchases a 5.4-acre site in Vernon

Key Developments

Ontario Bill 40 Introduces Grid Connection Screening That Could Reshape Toronto Data Center Development

Ontario's proposed Bill 40 legislation will fundamentally alter how large data centers access grid connections by requiring ministerial approval for projects above certain MW thresholds, creating new barriers based on size, location, and economic value assessments. The legislation establishes a three-tier screening process evaluating MW capacity, geographic placement in constrained versus surplus grid areas, and strategic economic contribution to the province. As a result, Toronto's balanced 7% vacancy rate may tighten as developers accelerate preapproval activities for planned projects. Operators are adapting to the regulatory shift by prioritizing sites in grid surplus areas and strengthening economic impact proposals, particularly for AI and cloud infrastructure that demonstrates higher strategic value. While Toronto has historically attracted development through proximity to financial districts and enterprise customers, future growth will increasingly depend on navigating ministerial approval processes and demonstrating alignment with provincial energy priorities.

The screening framework signals Ontario's intent to manage data center growth strategically rather than reactively. For the broader Canadian market, Bill 40 establishes a regulatory model that other provinces may adopt as data center demand intensifies, making early regulatory compliance and site selection increasingly critical for competitive positioning.

4Q 2025 Toronto Market Activity:

• Microsoft commits to investing greater than $7.5 billion CAD in Canada
• Rogers Communications sells portfolio of 9 data centers to InfraRed Capital Partners and creates entity Qu Data Centres
• Beeches Development Inc. proposes 7-story, 87k SF data center

Key Developments

Hyperscale Campus Announcements Confirm Market's Evolution as Regional Infrastructure Anchor

Osaka's expansion momentum continues with multiple large-scale campus announcements confirming sustained confidence from both hyperscale operators and developers. Recent project announcements ranging from 100 MW to 130 MW demonstrate Osaka's definitive transition from incremental capacity additions toward hyperscale campus development structured for phased delivery. This approach allows operators to align capital deployment with demand realization while preserving long-term expansion optionality on secured sites. Project timelines extending through the next decade, particularly for large joint venture-led campuses, indicate developers are underwriting long-term structural demand from cloud, AI, and digital services rather than near-term enterprise absorption cycles. This multi-year planning horizon reinforces investor confidence in Japan's data center fundamentals and fortifies Osaka's role as a critical node in the country's digital infrastructure strategy, providing geographic diversity from Tokyo while offering more favorable development conditions for large campus deployments

4Q 2025 Osaka Market Activity:

• SC Zeus Data Centers Breaks Ground on First Japan Data Center
• Colt DCS and ESR to Develop 130MW Hyperscale Data Center Campus in Osaka
• AirTrunk Expands Japan Footprint with New Osaka Data Center Campus