Summary:
1. Virginia’s data center market is undergoing changes due to power constraints, zoning restrictions, and community resistance.
2. Growth is shifting beyond Loudoun County to emerging markets like Prince William, Henrico, and Culpeper.
3. Energy supply remains a persistent challenge despite efforts to upgrade the grid and explore alternative energy sources.
Article:
Virginia, known as a prominent data center market, is experiencing a transformation as various factors like power limitations, zoning regulations, and community opposition reshape development trends statewide. While it has traditionally been a key hub for digital infrastructure, there is a noticeable shift in growth moving away from Loudoun County towards up-and-coming markets such as Prince William, Henrico, and Culpeper, as highlighted in a recent report by DCByte.
The decision in 2025 by Loudoun County to eliminate automatic zoning approval for data centers marked a significant shift in the industry landscape. Projects that previously progressed without hurdles now require additional authorizations, leading to a slowdown in expansion. Combined with Dominion Energy’s ongoing power shortages in Northern Virginia, developers are redirecting their investments to counties with more lenient permitting processes and available land, as noted in the report.
Market expansion southward in Virginia has been accelerated by Dominion’s power challenges, prompting data center development to spread further into the state. Stricter zoning rules in response to Loudoun’s overdevelopment have pushed growth towards counties like Culpeper, where community resistance to data centers encroaching on residential areas or historical sites is escalating.
Culpeper has emerged as a promising submarket in Virginia, boasting a Technology Zone (CTZ) supporting over 1 GW of potential capacity and attracting major players like AWS, CloudHQ, and DataBank. The concentration of data center development within a designated area in Culpeper sets it apart from other counties with stricter zoning regulations, potentially leading to more efficient timelines for development.
Despite efforts to upgrade the grid and explore alternative energy sources, energy supply remains a critical constraint for Virginia’s data center growth. Dominion Energy’s contractual commitments have nearly doubled, reflecting sustained demand but also longer delivery timelines for new infrastructure. Projects like Tract’s development in Chesterfield and AWS’ campus plans in Louisa County have faced setbacks due to infrastructure concerns and local opposition, resulting in longer construction schedules across Virginia.
Despite facing challenges, Virginia is expected to maintain its leadership in the data center market in the short term, thanks to factors like Ashburn’s data center hub, competitive land and power costs, strong connectivity, and tax incentives. However, states like Texas with significant development pipelines and a focus on alternative energy sources like nuclear and hydrogen could pose competition to Virginia’s leading position in the future.