Northern Virginia has become one of the biggest data center hubs globally with 70% of internet traffic from around the world going through its multitude of data centers. It manages to do so without hinging on the top data center, Amazon Web Services.
With Northern Virginia making a name as a hotspot of huge data centers, a lot of companies are being drawn to open their data centers there as well. The credit for this immense growth in Northern Virginia's data center popularity can be traced back to the time AOL started.
The Rise Of AOL
AOL, one of the oldest internet service providers in the United States (U.S.), built its headquarters in Northern Virginia back in the early '90s. Back then, AOL almost held a monopoly on the internet service industry. Various companies ran their fiber out to AOL as it was the internet everyone had.
After AOL, other internet service providers followed to establish their companies in Northern Virginia. To accommodate this rising population, they built the Metropolitan Area Exchange (MAE) - East, one of the main U.S. network access points. Carriers owned this exchange point, so there was doubt whether they were fair in allocating internet bandwidth. This exchange point was also already getting congested for a market that's growing at an unprecedented rate.
As the county area grew organically too, officials decided to take on a more active role in building data centers to ease internet traffic congestion. In 2014, they began to incentivize companies opening data centers in Northern Virginia. They put a fast-track commercial incentive program in place, providing county-sponsored dedicated project managers for data centers to be built.
Following the rise of AOL, different service providers in many other cities and counties have begun to put up data centers, too. However, Northern Virginia is still the most sought-after data center location even after several years since its first data center venture. How has Northern Virginia maintained its prime position as a data center hub?
One of the reasons Northern Virginia has remained a prominent data center location is by continuously incentivizing companies. From sales tax incentives to real estate investment trust (REIT) funds, Northern Virginia offers a wide array of rewards to companies who decide to operate in there.
Here are some of the benefits of housing data centers in Northern Virginia:
Northern Virginia attracts a large population of REIT investors. And although they have suffered a serious blow in 2017 as some faced up to 14% losses on their investments, investors were able to recover when 2018-2019 became one of the most profitable periods for Northern Virginia. Because of the growth opportunities that Northern Virginia has, investors preferred to keep on investing. Hence, data center companies can take advantage of this to get more investment deals.
The U.S. is somewhat unlucky when it comes to flooding and hurricanes, especially in the past few years. And since most data centers consume as much power as that of a small town, a flood or hurricane damage could have a serious impact on companies both financial-wise and manpower-wise. Fortunately, Northern Virginia is the least likely county to be hit by floods or hurricanes, making it a safe location for data centers.
Operating data centers require a certain level of expertise and thorough handling. Due to the complex skillset needed for this, companies sometimes face the shortage of experienced workers. But since Northern Virginia is near metro areas such as Washington D.C. and Baltimore, talented personnel are just within companies' reach.
Northern Virginia's financial incentives assist new and existing firms, so they could operate at their full capacity. Although this costs the county a lot with tax cut amounting to $65 million in 2018 alone, this move is still a major contributor to Northern Virginia's success in attracting more and more companies. In fact, the tax incentives are so lucrative that other states are compelled to implement lucrative tax incentives as well to be more competitive.
The data center market in Northern Virginia has grown to the extent that it consumes 1.1 gigawatts as of 2018. With the energy required to run data centers, companies have to find alternatives like solar energy and other renewable energies. Thankfully, in Northern Virginia, various companies can contract energy to data centers, so they won't need to worry about electricity in case of emergency.
The benefits mentioned above are only a few of the possible reasons why Northern Virginia is still at its prime in the data center market. Other cities and states that are part of the competitive space are Seattle, Portland, Dallas, Phoenix, and of course, Silicon Valley.
Undeniably, data centers have become the backbone of every company in this age of technology. And there is no better place in the U.S. for data centers than in Northern Virginia. Amazing policies, monetary aid, and many other benefits have made it a great choice for any data center company.
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