AREP JV Kicks Off Northern Virginia Data Center Campus

The demolition is slated for completion by early 2024. Image courtesy of PowerHouse Data Centers

PowerHouse Data Centers, a subsidiary of American Real Estate Partners, has begun demolition on a former AOL headquarters in Sterling, Va., where it will develop a new data center campus. The company, in partnership with Harrison Street, acquired the 43-acre site for $136 million in 2021, as reported by the Data Center Frontier.

PowerHouse Pacific will comprise three buildings totaling approximately 1.2 million square feet, along with a 2-acre power substation and will have a maximum capacity of 265 MW. The demolition is slated to finish by early 2024, enabling the power substation to commence construction in partnership with Dominion Energy, scheduled for completion in the summer of 2024.

Current structures on the site include two parking garages, three office buildings, one mail hub and a pedestrian bridge. The buildings will break ground in the fall of 2024, with delivery anticipated in mid-2026. E.E. Reed Construction will serve as general contractor.

A $1 billion commitment in Northern Viriginia

Located off Pacific Boulevard, the site is roughly 30 miles from Washington, D.C., and some 5 miles from the Dulles International Airport. It is also less than 3 miles from the joint venture’s first data center project in the area, the 265,580-square-foot ABX-1, which is now leased to CyrusOne on a 30-year term. These two developments are part of a $1 billion commitment to construct 2.1 million square feet of data center space in Northern Virginia.

Data center supply in primary markets saw a 12 percent increase in 2023’s first half, along with an all-time largest development pipeline for the asset type being recorded at 2,288 MW, representing a 25 percent year-over-year increase, a recent CBRE report shows. Northern Virginia has been the best performing market in the sector, registering a vacancy rate of 0.9 percent, the same source shows.

The region continues to attract new investors, such as Digital Realty’s recent $1.5 billion joint venture agreement with TPG Real Estate Partners for three data centers in the area.