QTS Real Estate Trust, a unit of Blackstone Group, has decided to abandon plans to build a data center campus in Virginia. This is a victory for local residents who have been fighting and trying to stop the project for years.
The data center developer originally planned to transform more than 800 acres of land in Northern Virginia's Prince William County into the heart of one of the world's largest technology corridors. Because it borders a historic Civil War battlefield and sits on land previously protected from development, the project sparked fierce resistance from property owners and was stalled by lawsuits.
Manassas National Battlefield Park in Manassas, Virginia
According to people familiar with the matter, QTS executives recently decided that it was no longer worth pursuing the matter in court. Lawyers for the company plan to inform the court of the decision as early as this week, said the people, who spoke on condition of anonymity to discuss non-public information.
A spokesman for Blackstone declined to comment, while a representative for QTS did not immediately respond to a request for comment.
The rapid development of QTS makes it a typical representative of the rapid expansion of the data center industry driven by private equity. However, these ambitions are clashing with public anxieties about the pressure AI data centers will put on power grids and house prices.
QTS's decision to give up this time is another major setback for Virginia's "Digital Gateway" project, which covers an area approximately twice the size of New York's Central Park and has power requirements as large as a city. The project was originally expected to bring in approximately $100 billion in spending and create one of the largest technology corridors in the world.
The project prompted contentious and lengthy public hearings. A clerical error related to a key zoning meeting also caused a setback for the developer. Compass Datacenters, backed by Bowen, which had planned to build on more than 800 acres of the site, withdrew in May.
The two companies' change of attitude is one of the most dramatic retreats by developers on data center projects.
This is a reminder that as technology companies race to build computing infrastructure to support the development of AI, they are increasingly facing bottlenecks ranging from power shortages to tight supply. Organized opposition is growing, forcing companies and developers to be more cautious about where they build.