Microsoft Expanding Its Virginia Data Center Footprint

Microsoft is once again expanding its data center campus in Boydton, a town in southern Virginia. The campus is going to be able to host one of three availability regions for the company’s Azure cloud in the state. In total, and not counting the last new expansion, Microsoft has invested about $2 billion in the campus, this estimation given by Richmond Times-Dispatch.

The office of Virginia Governor Ralph Northam announced the company’s plans Thursday, saying this decision will “inject significant capital investment” in what will become the sixth expansion at the site, which has been operational since 2010.

It’s not uncommon for cloud giants, including Microsoft, have been spending billions of dollars each quarter in recent years on expanding data center infrastructure for their platforms. In Virginia, this is very common with most of the construction activity taking place in and around Ashburn, which is located 230 miles north of Boydton.

Northern Virginia is the world’s largest and fastest-growing data center market, and Microsoft presence there is very notable. It’s common for cloud providers to usually have multiple data center locations that serve every major geographic area but spread apart so they are able, in case of any problem, to provide backup for each other. Microsoft’s Azure cloud has three availability regions in Virginia, two for the private sector and the other one to only serve government clients.

Azure US East 2 availability region is hosted on the Microsoft data center campus in Boydton, according to data center Hawk.

In statements, Northam and other state, local, and federal officials praised the economic development benefits Microsoft’s presence has brought to the area. According to the governor’s office, the company has been able to create 300 jobs in Mecklenburg County, where the town of Boydton is located. With the new planned expansion it is expected that 100 more jobs will be created.

As with the past construction and expansion projects at the site, Microsoft is again eligible for tax breaks for their last expansion. It will be able to apply the state’s Data Center Sales and Use tax exemptions to computing equipment and software it buys to fill the new space with.

According to Northam’s office, before Microsoft’s data center campus decided to be built in Boydton in 2010, Virginia was in competition for the expansion project with multiple states, which appears to be an explanation for the tax breaks.

Virginia’s sales and use tax exemptions for data centers accounted for about $80 million in uncollected state revenue in fiscal 2018, according to the Associated Press. Microsoft’s initial investment to build the data center campus in 2010 was nearly $500 million, including the previous expansion which was a $250 million project announced in 2016, the company has invested around $2 billion in building out the campus over the years, said Richmond Times-Dispatch in an estimation.