Subsea cable country
Henrico makes a play for data center dominance
The scheduled 2020 arrival in Henrico County of a third connection to ultra-high-speed internet subsea cables should give the Richmond region bragging rights as a destination for data centers.
In other words, it makes Central Virginia an alternative to Loudoun County, where 70% of all internet traffic flows but lacks a direct line to the subsea internet cables that run from Virginia Beach to Europe and South America. The speed at which Henrico has turned itself into a high-speed data hub also was quick, considering that the county accounted for only 6% of announced statewide investment in data centers from 2008 to 2016. However, by 2018, the county represented 53% of statewide investments in data centers, according to an analysis by Mangum Economics of Glen Allen.
White Oak Technology Park, a publicly owned 2,270-acre industrial park at the eastern intersection of interstates 64 and 295, is the focal point of Henrico’s efforts to attract data centers and internet companies.
It is there that Facebook Inc. is investing $1.75 billion in a data center complex, and Kansas-based QTS Realty Trust has a 1.3 million-square-foot data center catering to the federal market, with plans to expand it by 1.2 million square feet on an additional 210 acres.
Henrico’s marketing firepower arrived in 2018 in the form of two subsea cables, MAREA and BRUSA, linking Virginia Beach to Spain and Brazil respectively and connecting at a network access point (NAP) in White Oak created by QTS. Telxius, based in Spain, operates MAREA and BRUSA, which bring European, Latin and South American markets to Henrico’s doorstep, with the highest capacity cables ever deployed between the continents.
“The subsea cables that terminate in Richmond have opened an amazing opportunity for Henrico County to become a locus for both domestic and international applications,” said Vint Cerf, chief evangelist for Google and one of the co-inventors of the internet, before attending a summit in Henrico last May during which officials from several tech companies discussed the QTS Richmond Network Access Point.
In the next two years, two more Telxius-run subsea cables — Dunant from France, set to be finished this fall, and SAEx-1 from South Africa — are on their way to converge in Henrico at QTS.
Anthony J. Romanello, Henrico’s economic development chief, is bullish on White Oak’s future.
“I think it’s probably one of the prime opportunities on the Eastern seaboard because the infrastructure is in place: roads, water, sewer, power,” he says. Also, speed. MAREA is the highest capacity transatlantic cable ever constructed, running at a capacity of 200 terabits per second.
“Two hundred terabits is taking every movie that was ever made in the history of movie-making — from ‘The Jazz Singer’ to the ‘Avengers: Endgame’ — and you could take those movies in high definition and send them across the Atlantic in 42 seconds. That’s the power of these cables,” Romanello says.
He and his colleagues at the Henrico economic development office have been working hard to promote White Oak as an alternative to data center hubs in Loudoun.
But Henrico doesn’t hold a local monopoly on the tech industry. The Greater Richmond Partnership reports that the Richmond region is home to 2,400 information technology firms operating data centers. And Richmond-region tech firms employ more 21,300 people.
Henrico dropped its data center tax rate in 2017 from $3.50 to 40 cents per $100, and, more recently, Chesterfield County reduced its rate to the lowest in the state, from $1.80 to 24 cents per $100.
But even with lower tax rates, data centers spin off waves of annual tax revenue. In Henrico, for example, that revenue totaled $3.8 million for the most recent fiscal year reported.
“Of course, Facebook is just coming online, so this number will increase significantly over the next few years,” Romanello says. Facebook is expected to soon become the county’s largest taxpayer.
Chesterfield County recently announced plans for a solar farm and data center on a 1,600-acre megasite in Chester. Torch Clean Energy, a Colorado-based energy company, plans to build a $100 million solar farm providing up to 150 megawatts of power alongside a data center covering up to 1 million square feet on the megasite.
Early estimates show that the data center could create investments up to $3 billion, according to a county synopsis of the project. The data center’s tenant has not been finalized, and the proposal still requires some state approvals.
In Chesterfield, however, one of 2019’s biggest economic development announcements came not from data centers, but the travel and hospitality industry. Chester-based Shamin Hotels Inc., the Richmond region’s largest hotelier, announced plans to invest approximately $125 million in Chesterfield County through multiple projects, including a hotel and conference center at Stonebridge, capping off a successful revitalization of the former Cloverleaf Mall site.
In January, Shamin announced it was purchasing the Richmond Times-Dispatch newspaper building to establish a corporate headquarters in downtown Richmond, while leasing out parts of the building to the newspaper and others.
Chesterfield also welcomed a $25 million investment from Carvana, one of the nation’s largest used car companies, which will build an inspection and reconditioning center, creating 400 jobs. Altogether, Chesterfield tallied $248 million in new investments and nearly 2,000 new jobs last year.
In Hanover County, 2019 brought a flood of jobs and capital investment. And the outlook for the coming year is bright, says Linwood Thomas, Hanover’s economic development director.
“Our fiscal year 2019 was one of the most successful on record from an economic development perspective,” he says. “We announced over $350 million in new capital investment and added over 2,253 net new jobs, both of which are the largest since tracking began over 15 years ago.
“Wegmans’ commitment to build a $175 million regional headquarters and distribution facility over the next three years will create 700 new jobs [that are] almost 20% above our median-average wages,” Thomas adds, calling the announcement “a prime example of the continuing momentum.”
Meanwhile, in Richmond, a big debate over the proposed $1.5 billion Navy Hill downtown redevelopment project ended in defeat for developers and Mayor Levar Stoney in early February after City Council killed the proposal, which would have included a 17,500-seat arena to replace the shuttered Richmond Coliseum. Council passed a resolution keeping the door open to future redevelopment proposals for the area, however. (Read story here.)
On the western edge of the Central Virginia region, for the second year in a row Albemarle County led the way in new jobs created in the region encompassed by the Central Virginia Partnership.
Charlottesville tech firm Willow Tree Inc. will complete a $25 million relocation to Albemarle County’s historic Woolen Mills area this year, retaining 200 jobs and creating 200 more positions paying an average salary of $80,000.
And Castle Hill Gaming, a software developer that provides gaming software for slot games and tribal casinos across the country, announced it will invest $1.3 million to expand its corporate headquarters in Albemarle to support the hiring and training of 106 new employees, according to Helen Cauthen, president of the Central Virginia Partnership for Economic Development.
In Lynchburg, the economic engine of the community continues to be Liberty University, which during the past dozen years or so has poured $1.6 billion in improvements into its 7,000-acre campus, while accumulating an endowment nest egg of more than $2 billion. With a thriving online enrollment, the private Christian institution now has 111,000 students per year, the most in the state.
The city also has a strong nuclear industry cluster with France-based Framatome, a designer and supplier of nuclear equipment, services and fuel, as well as BWX Technologies, a publicly traded nuclear energy company with about 2,500 employees in the city.
The bad news has been the closing of the LSC Communications printing plant and the loss of about 390 jobs, according to Megan Lucas, CEO of the Lynchburg Regional Business Alliance.
However, she says 90% of those who lost their jobs were subsequently hired by other regional employers