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(TNS) — Data Center Alley covers a section of suburban Northern Virginia, just outside Washington, D.C. Its name emerged in the early 1990s when major tech companies like Yahoo and AOL, enticed by the region’s fast Internet connectivity, built large centers for their data to pass through.
Today, Virginia’s Loudoun County has the highest concentration of data centers in the world. Driven by cloud computing and artificial intelligence, the county has more than 200 facilities — with at least another 115 planned. Last year, Loudoun permitted around 43 million square feet of data center space, a 230% increase from 2018.
“There has not been a single day without data center construction in Loudoun in more than 14 years,” the county’s economic development team boasts online.
Some in Virginia have become weary of this spike. Data center operators pay property taxes, but the structures also strain the electrical grid and threaten to increase household electric bills. They are noisy. Neighbors find them aesthetically incongruous. And compared to factories, data centers consume tremendous energy while employing relatively few workers.
Yet they are also essential to life in 2025, processing and storing society’s increasing amounts of data.
This year, Loudoun County has advanced a new rule to remove data center builders’ “by right” zoning status. Neighboring Fairfax County already set a zoning ordinance in September. And at the state level, Virginia lawmakers weigh other regulations to slow the growth of Data Center Alley.
The Tar Heel State doesn’t have a “data center alley” but it does support a corridor. An hour’s drive from Charlotte, the region of Western North Carolina surrounding the city of Hickory has been deemed the “data center corridor” for its success recruiting massive hyperscale sites.
In 2007, Google opened a data center in Caldwell County. A few years later, Facebook (now Meta) and Apple built sites in Catawba and Rutherford counties. And in 2022, Microsoft committed to spending at least $1 billion to construct four data centers in Catawba.
These tech giants were courted by local officials wishing to transition local economies away from embattled industries, says Scott Millar, president of the Catawba County Economic Development Corp.
“The reason we started chasing data centers was the ability to use a lot of the legacy infrastructure that was put in place for textiles and furniture,” he said. “You had huge power grid capabilities. You had Duke Energy as an efficient cost provider. You had water and sewer usage systems that were put in place for textiles, primarily. All of those (industries) were challenged because of globalization.”
Apple’s North Carolina data center was once a farm, Millar explained, before Catawba officials marketed it as a campus to house rows of servers. Apple received local incentives to build the center in the town of Maiden — a 50% rebate on property taxes and an 85% rebate on personal property. This is the same arrangement Catawba later reached with Microsoft.
Then in 2021, North Carolina awarded Apple a Job Development Investment Grant, or JDIG, to expand its Maiden data center and establish a $500 million office campus in Research Triangle Park.
Even accounting for tax breaks, Millar called the net benefits of having Apple in the community “substantial.” Last year, the company paid roughly $10 million in local taxes — before rebates — and Millar has previously said around 400 workers, between Apple employees and contractors, report to the site.
Is there a ceiling to North Carolina’s data center corridor? “Yeah, there is an upper limit,” Millar said. “And I think we’re going to see challenges as the industry grows, as North Carolina grows, as Toyota saps power, as Wolfspeed takes power off the system. All these are interconnected.”
THE DATA CENTER CONUNDRUM
One thing to know about data centers is what they lack. Thousands of servers hum throughout these mammoth buildings at all hours without much human supervision.
“What most people don’t appreciate about those things is how few people there are,” said Chris Beal, vice president of enterprise IT and cybersecurity initiatives at MCNC, a broadband Internet nonprofit in Research Triangle Park.
For example, Apple isn’t among the top 25 employers in Catawba County despite having operated a mall-sized data center in the county for over a decade. In 2006, North Carolina awarded Google a JDIG to hire at least 168 workers at its new Caldwell County data center, a grant that was later withdrawn.
Compare these job figures to North Carolina’s recent biggest JDIG awards: In December 2021, the state awarded Toyota an incentive to hire 1,750 workers at a future battery plant south of Greensboro. Toyota now anticipates hiring as many as 5,000 workers at the site, with its first batteries set to ship out this month.
This is the dynamic facing North Carolina economic leaders. Data centers demand the energy of a large manufacturing factory, but without the associated jobs.
“The trade-offs are interesting,” said Tom Wilson , principal technical executive at the Washington, D.C., nonprofit Electric Power Research Institute. “They do provide tax revenue. They also get tax breaks in a lot of states.”
Some rural counties, Wilson noted, may desire low-employment data centers that don’t transform their communities. “They would like to have the tax revenue but not have a lot of new people they need to build schools for and provide services, and so on,” he said.
But the state’s business recruitment efforts haven’t generally targeted data centers. In the 21 years of its JDIG program, North Carolina has only awarded its chief incentive grant to two hyperscalers, Google in Caldwell County (2006) and Apple in Catawba (2021). And that latter grant included the prized RTP campus (which has since been postponed).
“As far as utilizing our discretionary incentive programs (like JDIG and One NC), typically those tools aren’t the best fit for those projects,” N.C. Department of Commerce spokesperson David Rhoades said in an email.
North Carolina does however offersales tax exemptions for data center purchases, including qualified equipment, electricity and computer software.
As demand for data centers grows, more North Carolina communities —from rural Person Countyto Raleigh — will be faced with similar choices. Facing finite energy, are data centers the right investment?
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