Amazon’s Data Center Offensive Continues In World’s Largest Market

Amazon doesn’t appear to be slowing down data center construction in 2020 as the public cloud giant is buying more land in northern Virginia.

Amazon spent hundreds of millions last year in expanding its data center presence in northern Virginia, the world’s hottest data center market. In 2020, the public cloud titan doesn’t appear to applying the brakes on data center spending.

Amazon subsidiary Amazon Data Services recently bought 100 acres of land for $73 million in Chantilly, Virginia, which was first reported by the Washington Business Journal. Northern Virginia is home to Amazon Web Services’ largest data center hub in the globe with a total of six AWS availability zones in the region.

Northern Virginia houses more than 100 data centers and is strategically located near Washington, D.C. A large percentage of the world’s internet traffic flows through the region, which has witnessed a giant data center boom over the past several years thanks to cloud services providers like Amazon, Google and Microsoft spending billions on buying land to build hyperscale data centers on.

[Related: Cloud Infrastructure Services Surpasses Data Center Spending In 2019]

Although ground will likely not be broken in Chantilly, Virginia, this year, Amazon is already in the process of constructing new hyperscale data centers in northern Virginia in 2020. Amazon did not respond for comment by press time.

Amazon, Apple, Google, Facebook and Microsoft led the charge in terms of building new data centers in 2019, all of which are building hyperscale facilities that house tens of thousands of servers and hardware alongside millions of virtual machines. In the third quarter of 2019, hyperscale capex data center spending exceeded $31 billion, up 8 percent year over year.

Hyperscale operators like Amazon accounted for 33 percent of all spending on data center hardware and software in the first three quarters of 2019, up from 26 percent in 2017 and an increase from 15 percent in 2015, according to Synergy Research Group.

Hyperscale data centers have been growing at a historic rate over the past six years, with the number of hyperscale data centers tripling since 2013. At the end of third the third quarter of 2019, a whopping 504 of these large data centers were being operated with more than 150 new hyperscale centers on the way.

There are many factors driving data center growth across the globe including the rise of cloud and growing data demands as well as new tax incentives fueling data center construction. Government entities across the globe are implementing various data center tax incentives this to try to sway companies to build new facilities in their region with hopes of bringing new jobs and opportunities to the area.

Amazon has aggressively been chasing these data center tax incentives. For example, in 2019, local authorities in Oregon agreed to give Amazon a total exemption from property taxes for 15 years in order to sway the company to build a new data center campus. Amazon is now preparing to start construction on its seventh data center in northeastern Oregon.