Market Overview

Key Developments

Loudoun County Approves Phase 2 of Data Center Standards and Locations Project

This past September, Loudoun County approved Phase 2 of its Data Center Standards and Locations initiative, refining zoning and operational guidelines for the regions booming data center industry. Building off of Phase 1 which was approved earlier this year in March, shifted data centers to special exception status, Phase 2 introduces 15 priorities to balance economic growth with environmental and community concerns. The plan also addresses infrastructure demands, with standards for utility substations and microgrid integration, aiming to mitigate data centers large energy and water consumption.

Loudoun’s proactive policies come as Virginia’s 2025 General Assembly session saw 33 data center bills introduced, but only four passed, effective July 2025. With data centers straining grids and raising local concerns, Loudoun’s Phase 2 sets a model for sustainable growth, with enhanced evaluation criteria expected by mid-2026 and final board action by December 2026.

Impact of PJM Interconnection Proposal for Northern Virginia

As of October, PJM is advancing proposals under its Capacity Interconnection for Large Load Additions (CIFP-LLA) process. These proposals include concepts often referred to as “bring your own power” or require data centers to secure their own generation capacity for expedited grid interconnections. Under the proposed system, large new loads like data centers exceeding 50 MW could be classified as “noncapacity-backed load” (NCBL), meaning they wouldn’t count toward PJM’s capacity reserves unless they voluntarily agree to curtail usage during peak times or “bring their own” dedicated power sources. As PJM’s Federal Energy Regulatory Commission (FERC) filing is expected in December 2025, along with the regions’ stricter local regulations and community pushback, these proposals may further drive hyperscale AIdriven projects to locations such as West Texas.

Key Developments

New California Legislation Targets Data Center Power and Water Use

In the third quarter of 2025, two key pieces of California legislation, Assembly Bill 93 and Senate Bill 57, moved through the state legislature, signaling growing scrutiny of how data centers consume water and power. While one bill ultimately stalled, the other advanced, together illustrating how state policymakers are beginning to shape the environmental and economic framework around large-scale digital infrastructure, particularly in resource-constrained regions like Los Angeles.

For the Los Angeles data center market, these developments highlight rising regulatory and cost pressures in a region already grappling with limited water and power capacity. Future projects may face tighter permitting reviews, higher utility expenses, and greater emphasis on sustainable cooling technologies and efficient grid integration. While AB 93’s veto delays direct regulation, both bills exhibit California’s stance toward future data center development, one focused on accountability, resource conservation, and long-term grid resilience.

3Q 2025 Los Angeles Market Activity:

• Goodman Group tops out its Los Angeles data center, Vernon

Key Developments

Investment Surges and HPC Projects Signal Possible Evolution in the Toronto Market

Toronto’s data center market is gaining momentum, driven largely by Canadian companies securing funding to support expansion and new developments. Companies like Urbacon Data Centres, Cologix, eStruxture, and Related Digital have all obtained capital to build out or expand their portfolio. Additionally, Qscale’s planned entrance, combined with another large HPC deal completed earlier this year in Toronto, signals increased interest in high-performance computing in the region. While some facilities in this market have available capacities of 1 MW or more, hyperscale-sized deployments will require some building out or construction. Across Canada, communication providers are investing in expanding fiber lines and mesh networks that will pass through or near Toronto, enhancing connectivity for the city and the country as a whole. These network improvements, while not exclusively focused on Toronto, will strengthen the broader infrastructure supporting advanced workloads and data center growth in the country.

For those in the Toronto data center industry, this trend means growth fueled by both private investment and improved national connectivity, creating opportunities but also necessitating strategic planning for largescale expansion.

3Q 2025 Toronto Market Activity:

• Qscale secures construction firm and power provider for planned Toronto data center.
• Urbacon Data Centre Solutions receives financing to build out data centers 4, 5, and 6 at the Barker Business Park in Richmond Hill, ON
• Canada Pension Plan Investment Board allocates C$225 million for 50% stake in the construction loan for preleased hyperscale data center, which is a JV with Related Digital, TowerBrook Capital Partners, and Ascent

Key Developments

Osaka Q3 2025 Campus Scale Plans Firm up While Power Sets the Pace

Osaka’s quarter was quiet on new openings but clear on direction as the market converged around very large campuses and higher density designs, with new platforms publicly sizing future footprints in the hundreds of megawatts, a sign that Osaka is set to complement Tokyo as a twin growth pole for AI and cloud. The limiting factor is electricity rather than capital, since grid bottlenecks and interconnection queues are now the main driver of delivery and could push some projects toward the 2029 window, which concentrates pre-leasing on sites that can show confirmed power timelines. Chinese hyper-scalers have shown an increasing interest in Japan, with increase in talks and activities this quarter. Developers and investors also signaled interest in alternative capacity paths such as a floating data center platform in Osaka Bay, which reflects a broader push to work around land and power constraints. Repurposing of industrial assets into AI facilities further underscores a shift to dense compute and resilient power at scale, reinforcing Osaka’s move from secondary option to strategic node in Japan.

3Q 2025 Osaka Market Activity:

• NTT West, NTT SmartConnect, and At Tokyo have begun a joint study to build “next-generation digital infrastructure” in Western Japan, positioning Osaka—along with Fukuoka—as core hubs to decentralize capacity away from Tokyo
• EdgeConneX acquired a second data center site in the Greater Osaka and Yawata areas that will add 150MW at completion, taking its Japan footprint to 350MW of utility power at full build-out