Leasing property for data centers in Virginia presents a unique opportunity for landowners to tap into the burgeoning tech industry while maximizing their land’s potential. With Virginia being home to one of the largest concentrations of data centers in the country, property owners have a prime chance to leverage this demand. As a landowner, you can play a crucial role in supporting the digital infrastructure that drives modern business and innovation. In this resource, we will explore the advantages of leasing your property for data center use and how LandGate's marketplace can seamlessly connect you with interested lessees, enabling you to monetize your property effortlessly.
What should property owners know about leasing property for data centers in Virginia?
Over the last decade, the data center market has been growing rapidly, undergoing a remarkable transformation. Data centers serve to be an essential part in maintaining internet growth and online service demand. They serve as specialized locations of vast computer networks and storage systems that work around the clock to process, store, and manage data. The North American data center market is projected to grow to $143.52 billion by 2028, with rapid demand expansion and a CAGR of 17.1%.
Virginia is known to be the ‘Data Center Alley’ and is the leading state across the United States for data center growth and technology development. Virginia is home to over 400 data centers and represents 35% of all known hyperscale data centers worldwide. Between 2015 and 2024, Virginia’s data center market has shown over 500% of growth. As of Q3 2024, Northern Virginia holds over 1600 MW of power and is expecting a double in demand over the next decade, aided with a 12% annual increase in peak electric load over the next 15 years driven exclusively by data centers.
With these rising numbers, landowners in Virginia have experienced an increase in demand for their land to be used for data centers. Many developers are looking for land to expand existing sites and build new projects across the state, contributing to the large market for data centers within Virginia. These opportunities provide benefits not only for the general economy and the job market, but also for landowners across the state.
LandGate is a marketplace that connects property owners of all types who want to sell or lease their land directly to developers seeking land for data centers, while also providing useful property data to landowners to help them make informed decisions through this process. Equipped with information about the value of their land, property features, lease estimates, and much more, LandGate provides landowners in Virginia with extensive property data at no cost to help navigate the process of leasing or selling their land for a data center.
To learn more about your property's potential suitability for a data center, get a free Property Report by finding your property on LandGate's map and check out the data center value index score:
Why is it attractive to lease or sell your land for data centers in Virginia?
Virginia is rightfully the leading data center market within the United States, offering a multitude of benefits to landowners and project developers alike. With its favorable business environment, reliable energy resources, large scale of return and great locational advantage, Virginia remains at the forefront of the market. Major players such as Amazon Web Services (AWS), Microsoft, and Google have substantial operations in the state and have announced plans to expand or build new projects in the area. These large investors in the state have been quick to integrate artificial intelligence and environmental sustainability measures into their projects.
While the buildable acreage for data centers in Virginia can vary according to project specifications, the typical size range for small facilities can start off with just a few acres while large-scale projects cover an average of 100-150 acres. Larger data centers in Virginia can exceed 200 to 300 acres. A medium-sized data center will typically range between 50-90 acres of land, and is the most popular size of property that developers demand in Virginia.
Along with the financial gain from either leasing or selling their property for data centers, landowners in Virginia should be aware of the benefits that developing a data center has on the regional and state economy. The data center industry has been responsible for large boosts in the state economy, generating $1.2 billion in tax revenue, including $1 billion for local municipalities and $174 million for the overall state. Such large returns have ripple effects into other sectors of the economy. Virginia’s data center market has brought in a multitude of job opportunities across the state. With over 26000 operational and construction jobs created in North Virginia alone, the rest of the state is not far behind in providing construction, maintenance, and full time employment opportunities. With each data center creating hundreds of jobs for local contractors, suppliers, on-site and maintenance workers, they also generate full-time job opportunities across colocation facilities and hyperscale projects.
Additionally, Virginia is leading advanced technological methodologies and is far ahead of other data center markets in incorporating artificial intelligence, machine learning, and edge computing methods within their work spaces to improve overall efficiency and performance. Latency reduction efforts, like reducing data file size for smoother data transmission, have increased with the advancement of technology within data centers, allowing Virginia to remain at the forefront of technological innovation. With Dominion energy connecting over 15 data centers in 2023 and reaching a total of 933 MW, the implementation of AI in latency reduction methods has been crucial to their expansion.
Moreover, data center projects in Virginia are incorporating environmental sustainability methods to increase energy and productive efficiency, making them low-traffic sites with reduced infrastructural strain. Many companies have included initiatives such as advanced cooling techniques such as liquid cooling of HVAC. Some data center companies have gone as far as to reduce 40% of energy consumption. Additionally, some companies, such as Google, had adopted 100% renewable energy as their main energy sources within data centers.
Considerations for Property Owners
By leasing or selling property in Virginia for the development of data centers, landowners are able to contribute to the infrastructure that keeps the digital world and the economy running smoothly. Property owners of all types, ranging from private property owners to corporations and governments, are not only a critical component in the digital network that supports the technology provided by data centers we need to operate every day, but also a key component to regional and state economic development.
When selling or leasing land in Virginia for data centers, landowners should keep the typical size requirements in mind along with several other important considerations. Zoning and regulatory laws will impact the amount of land eligible for development. The property’s proximity to power and fiber optic sources will also affect a property’s suitability for data center development.
Virginia’s large market allows it to provide generous exemptions to investors and landowners alike. The Virginia Economic Development Partnership offers a 6% retail tax and exemption on IT equipment and enabling software, increasing demand for projects in the area. The upcoming Mega Data Center Incentive Program proposes extending these exemptions for up to 15 years on qualifying equipment. This program currently runs through 2035 and also includes up to $140 million for site and infrastructure improvements, workforce development, and other project-related costs. In addition, Henrico County will allocate $60 million from data center revenues to its first Affordable Housing Trust Fund (Henrico County). Long-term tax benefits also allow data center investors to enter into long-term lease agreements with landowners to construct data centers on their property, which provides a secure and consistent source of income for landowners.
Institutional and government property owners in Virginia also have the opportunity to lease their properties for data center development to generate revenue and contribute to economic growth. To learn which of your agency’s specific sites are most suitable for data center development, book a free consultation call with the government & corporate team at LandGate below:
What is the process of leasing land in Virginia for data centers?
Data center land leases are long term commitments, so property owners interested in monetizing their property through this method should be aware of all steps involved so that they can make well-informed decisions.
Step 1: Land Qualification
The first step for landowners in Virginia curious about leasing or selling their land for data center development is to understand if their land is suitable for a data center. Factors such as location, buildable acreage, zoning, topography, proximity to energy and utilities, and environmental considerations like flood zones and wetlands all impact a property’s viability for a data center.
Curious if your land in Virginia could qualify for a data center lease? LandGate provides data center value index scores for every property in the U.S. within our free property reports. On a scale of 0-100, the data center value index score will let you know how suitable your property could be for data center development. Get a free property report by finding your parcel on LandGate’s map:
Step 2: Market Your Property for Lease or for Sale for a Data Center
Listing your property in Virginia for lease or for sale for the construction of a data center on LandGate’s marketplace is the best way to market and get the most value from your property. By listing on LandGate’s marketplace, you are presenting your property to various competitive companies actively searching for properties in Virginia to lease or buy for data center development.
If you’re unsure if your property could be suitable for a data center, our team recommends creating a listing anyway- listing is completely free with no obligations to accept any offers, so you never know what kind of offers you may receive.
Step 3: Receive Lease Offers
Once your listing is live on LandGate’s marketplace, any interested developers will reach out to you directly with offers using the contact information provided when you registered for your LandGate account.
Step 4: Lease Negotiation
Negotiating the ground lease offer is the first step you will take after receiving an offer. LandGate is unable to provide legal advice or assist with conducting due diligence on any offers that you receive, but we can refer you to a licensed expert that can help. These professionals, such as commercial real estate brokers, attorneys, and engineers, can assist you in ensuring that you are securing a good deal.
Always remember that lease agreements are completely negotiable. You can negotiate things like the value of the lease payments, the length of the lease, and the percentage of the escalator. Typically, ground leases for data centers range from 75-99 years, and generally provide escalating base rents, percentage rent arrangements, and outline responsibilities for maintenance and utilities.
Step 5: Lease Option Agreement
After negotiations, developers need to retrieve data center option agreements. Typically, this follows a check by the developer, ensuring that the land meets their needs and in the case of tax exemptions of subsidiaries, meets all necessary government requirements. It is essential for both parties involved in the agreement to assess possible engineering and land factors, to ensure the feasibility of the project and ensure that it receives all necessary approvals to begin. Oftentimes, data center proposals will be pitched to the county or state government.
Why can’t I get a lease agreement directly?
The process of developing any large data center begins with the developer optioning the land, also known as ‘site control,’ typically through a Ground Lease. Once thorough land evaluation has taken place, utility application is necessary. This means that the data center project will need further due diligence to ensure that sites have required proximity to a power source (renewable or a power substation), access to fiber optic cables, and that necessary easements are in place.
Where can a landowner get more information about the lease?
You can find out if your property could be suitable for a data center by getting a free property report from LandGate. LandGate provides data center value index scores for every property in the U.S., which will evaluate your property on a scale of 0-100, letting you know how suitable your property could be for a data center. Get a free property report by finding your parcel on LandGate’s map:
Step 6: Lease Agreement
Once site control is confirmed, the project is then moved to a ‘planned’ phase. The option agreement now becomes an official lease agreement, and the landowner begins to receive lease payments from the data center developer. The specific amount of these lease payments depends on what is negotiated in the lease.
Step 7: Data Center Construction
Lease payments for data centers are phased as projects progress. Typically, the lease payments start as a small amount during the option period and increase during the construction phase of the data center, with payments reaching their peak upon completion of the data center.
Depending on the size of the project, constructing a data center can take anywhere from 18 to 40 months before the data center reaches full operation. Smaller projects will take a substantially less amount of time to complete.
Step 8: Active Data Center
After construction is completed and the data center is fully operational, the lease enters the ‘production’ phase, which indicates that the land is now responsible for data storage and transmission through the data center. This period will last throughout the remainder of the lease.
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