Amazon to Invest $35B in Virginia Data Centers

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The largest U.S. data center market continues to attract massive investments from top operators in the sector. Amazon Web Services has announced it will commit $35 billion over the next 17 years to expand its data center operations in Virginia, effectively doubling its presence in the state.

Amazon is considering several localities for its new data center campuses, but the locations will be decided at a later date. The upcoming expansion will generate at least 1,000 new permanent jobs across the state.

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Amazon has more AWS data centers in the Commonwealth of Virginia than in any other location in the U.S. Since 2006, when it brought online its first facility, the firm has invested more than $35 billion in the region, and contributed to growing the state’s GDP by nearly $7 billion.

“Virginia has collaborated with Amazon for several years and the company is committed to long-term growth in the Commonwealth. When considering an expansion of data centers to meet customer demand, AWS considered a lot of options and did its due diligence. The Commonwealth of Virginia offers an array of discretionary incentives for competitive projects evaluating a Virginia location, providing financial inducements that make good fiscal sense for all parties. Performance-based incentives target the needs of companies as well as the development plans of localities and the Commonwealth,” a spokesperson from Virginia Economic Development Partnership told Commercial Property Executive.

According to Dgtl Infra, AWS has more than 100 data centers in Virginia, some of which are currently under development or in the planning stages. The state is also home to Amazon’s HQ2, in Arlington, which in March last year celebrated a new milestone.

New tax incentives for data centers

The cloud provider will benefit from a new tax break program, dubbed the Mega Data Center Incentive Program. It is currently pending approval by the Virginia General Assembly, and will include an extension of up to 15 years of tax exemptions. Additionally, the company is also eligible to receive a custom performance grant of up to $140 million for site and infrastructure improvements, workforce development, among other costs.

“AWS is among the largest private-sector employers in Virginia, with over 8,800 full-time, well-paying jobs in corporate offices and data centers across Virginia. The economic growth created by major data center investments creates a ripple effect that expands the local tax base, improves schools, creates indirect jobs, and benefits communities,” the spokesperson told CPE.

The top data center market

Northern Virginia remains the top data center market in the U.S. by sheer size, with more than 2.5 gigawatts of deployed capacity at the end of 2022, and a vacancy rate of under 1 percent, according to a recent Cushman & Wakefield report.

Recent projects in the market include STACK Infrastructure’s 80-acre campus in Sterling, along with the $1 billion commitment by a joint venture of American Real Estate Partners and Harrison Street, which aims to bring online 2.1 million square feet of data centers in Ashburn and Arcola.

AWS, along with Microsoft Azure and Google Cloud, are the largest hyperscale cloud providers in the world. According to the same report, pre-pandemic trends evolved to a point where 70 to 80 percent of any data center leasing, in almost any given market worldwide, pertained to hyperscale cloud services. In the U.S., revenue generated from these services reached $87.6 billion in 2022, more than in the rest of the world combined.