Henrico County, Virginia, is quietly becoming a cornerstone of the data center industry’s expansion beyond traditional hubs. DC Blox’s $8 million acquisition of the Azalea Flea Market site for a 65,000-square-foot data center is more than a regional development; it is a reflection of a larger trend within the digital infrastructure market. As primary markets like Ashburn reach saturation, secondary markets are emerging as fertile ground for investors seeking both growth and value. Henrico County, with its strategic location, robust power infrastructure, and favorable business environment, offers a compelling case for why secondary data center markets are not only rising—they are becoming essential.
Henrico County: A Strategic Bet in a Shifting Market
The selection of Henrico County by DC Blox is far from coincidental. Northern Virginia, and specifically Ashburn, has long been the world’s largest data center hub, boasting the highest density of fiber networks globally. However, rising costs, limited land availability, and increasing regulatory hurdles are pushing developers and investors to explore alternative markets. Henrico County, positioned just outside of Richmond, offers a powerful combination of infrastructure, affordability, and connectivity.
The 30-acre property acquired by DC Blox, formerly home to the Azalea Flea Market, represents a shift in how data center operators approach site selection. Initially met with community resistance and regulatory hurdles, the project was revised to avoid rezoning conflicts, demonstrating DC Blox’s flexibility and ability to navigate local concerns. This adaptability is crucial in secondary markets, where public sentiment and local governance can significantly shape project outcomes.
Henrico’s infrastructure advantages are notable. Dominion Energy’s robust power grid and the region’s extensive fiber optic network ensure reliable, low-latency connectivity—two non-negotiable requirements for hyperscale and telecommunications-oriented data centers. Additionally, Henrico County’s local government has embraced data center development, offering competitive tax incentives and streamlined permitting processes. This supportive environment, coupled with proximity to other major distribution hubs such as Amazon’s Richmond facility, makes Henrico a logical choice for expansion.
The Rising Appeal of Secondary Data Center Markets
Henrico County’s emergence is part of a larger narrative: the ascent of secondary data center markets. Historically, primary hubs like Northern Virginia, Silicon Valley, and Dallas dominated the landscape due to their established infrastructure and connectivity ecosystems. However, the industry is undergoing a significant shift driven by cost dynamics, technological advancements, and evolving customer demands.
1. Cost Efficiency and Operational Advantages:
Secondary markets like Henrico offer significantly lower real estate and power costs than saturated primary markets. In Ashburn, for example, land prices have skyrocketed due to limited supply and high demand from cloud giants. Henrico, by contrast, provides a more cost-effective alternative without sacrificing connectivity or reliability. Lower operating costs translate into higher profit margins for operators and, ultimately, better returns for investors.
2. Geographic Diversity and Risk Mitigation:
The growing need for geographic diversity is driving data center expansion into secondary markets. Companies reliant on a single market face heightened risks from natural disasters, power outages, and regional disruptions. By diversifying into regions like Henrico, operators can distribute workloads and maintain continuity during crises. This trend is particularly pronounced among hyperscale providers seeking redundant nodes to bolster their cloud and edge computing networks.
3. The Shift Toward Edge Computing:
The rise of edge computing, fueled by technologies such as 5G, IoT, and AI, is accelerating the need for regional data centers closer to end-users. Henrico’s location along major fiber routes and its proximity to the East Coast population centers make it an ideal candidate for edge deployments. Secondary markets, once viewed as supplementary to primary hubs, are now becoming essential nodes in a decentralized digital infrastructure ecosystem.
Investor Implications and Market Outlook
For investors, the development in Henrico County offers valuable insights into the evolving data center landscape and where future opportunities may lie. Several key takeaways emerge:
1. Growing Competition in Secondary Markets:
Henrico County is not alone in attracting data center investments. Across the United States, markets such as Columbus, Ohio; Reno, Nevada; and Phoenix, Arizona are experiencing similar growth trajectories. This increasing competition underscores the importance of early entry. Investors who identify and secure opportunities in emerging secondary markets before they become saturated are well-positioned to benefit from long-term appreciation.
2. The Importance of Community and Regulatory Engagement:
DC Blox’s experience in Henrico highlights the critical role of local engagement. Initial resistance from the community and the Henrico Planning Commission could have derailed the project. However, by adjusting site plans to align with existing zoning laws, DC Blox not only secured project approval but also built goodwill with local stakeholders. Investors should prioritize projects where developers demonstrate sensitivity to local concerns and adaptability in their planning processes.
3. Long-Term Demand Driven by Hyperscalers:
The involvement of a Fortune 500 cloud provider in DC Blox’s Henrico project signals continued strong demand from hyperscalers. As companies such as Amazon, Microsoft, and Google expand their cloud and AI capabilities, their need for additional data center capacity will continue to grow. Secondary markets, with their cost advantages and expansion potential, are poised to benefit from this sustained demand.
Conclusion: The Secondary Market Surge Has Just Begun
Henrico County’s emergence as a data center hub is not an isolated event—it is a harbinger of the industry’s future. As primary markets reach their limits, secondary markets will increasingly take center stage, offering both growth opportunities and strategic advantages. For investors, the message is clear: the most promising returns in the data center market may no longer be found where everyone is already looking, but rather in emerging regions like Henrico that are poised to become the next digital powerhouses.
DC Blox’s project is not just a data center; it is a testament to the shifting tides within the industry. As more companies recognize the potential of secondary markets, Henrico County’s rise may well be remembered as the moment when the center of gravity in the data center world began to shift.
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