Northern Virginia

Northern Virginia remains the largest and most supply-constrained data center market in North America. Q1 2026 vacancy declined to 0.3% while the market absorbed more than 1.1 GW of capacity over the trailing year, leaving 96% of scheduled 2026 deliveries preleased and effective near-term availability effectively exhausted. Power infrastructure has become the primary limiting factor for additional growth, with Dominion Energy's interconnection timelines extending several years for large-load projects despite continued hyperscale demand. Industrial real estate conditions remain similarly constrained, with 3.7% vacancy, no new deliveries during the quarter, and 813,000 square feet under construction, reflecting limited expansion despite sustained development interest.

Northern Virginia's infrastructure constraints have shifted the market's competitive advantage from land ownership to access to deliverable power. As utility interconnection timelines extend, existing powered campuses and entitled sites are increasingly differentiated, while speculative developments without secured power face higher execution risk and longer development timelines. The result is a market where access to power, rather than tenant demand, has become the primary determinant of project viability, raising barriers to entry and reinforcing the value of existing infrastructure.

Northern Virginia's outlook will largely depend on whether utility infrastructure expansion begins to narrow the gap between power demand and deliverable capacity. Investors should monitor Dominion Energy's transmission upgrades, the implementation of Virginia's new GS-5 rate class, and local permitting decisions that could influence the pace of future data center development. We are also watching whether Virginia's data center sales and use tax exemption is maintained, as changes to the state's incentive framework could materially affect development economics and long-term market competitiveness.