$266M private equity fund eyes Chantilly for new data center - What would NextEra’s Dominion acquisition mean for NOVA’s data center pipeline?
JCPenney mystery solved–and what the retail-to-experiences wave means for commercial valuations
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Programming note: There won’t be a newsletter next week, as we’ll be on a family trip. We’ll be back in your inboxes on June 4.
Data Center Watch
SCOOP: $266M private equity fund eyes Chantilly for new data center
Yet another data center may be coming to Chantilly, this one backed by Highbrook Investors, a real estate private equity firm that in March announced the creation of a $266 million data center fund targeting Northern Virginia. County records show an LLC that shares a Florida address with Highbrook started–but has not yet submitted–zoning compliance paperwork for “new data center construction” at 14790 Flint Lee Road in Chantilly, just northeast of the Cub Run Rec Center and Westfield High School.
Chantilly has fast-become a major data center hub, including a proposed facility we reported last week that would be the first in Fairfax County to generate power with fuel cells. Highbrook, which has U.S. offices in New York City and West Palm Beach, owns 11 assets in Northern Virginia totaling 719,386 square feet, per its website. Its data center fund already has 300 megawatts of contracted utility power, with substation equipment on order, according to the March announcement. Highbrook’s lead developer will be Centra, which has built data centers in Minneapolis, Charlotte, and other U.S. cities and is described as a “Virginia-based vertically integrated industrial and data center operating platform.” Highbrook did not respond to requests for comment.
Compass Datacenters CEO discusses failed Digital Gateway project
Compass Datacenters CEO Chris Crosby said the quiet part out loud at a Bisnow conference last week: Data center developers will route capital away from jurisdictions that fight them. “We’ll just leave. We’ll go to another spot,” he said, discussing his decision to back out of the Digital Gateway project in Prince William County after sinking $40 million into the project. The decision came after an appeals court ruled against the project on procedural grounds. “We’ll walk away, and now that community doesn’t get $15 billion in investment. That’s OK, they don’t want it,” Crosby said. “The United States is big enough, capital can still flow to places that want you to be their neighbor.”
The data center complex faced community opposition in part because of its proximity to Manassas National Battlefield. QTS, another developer, plans to continue fighting to save its portion of the project, appealing to the Virginia Supreme Court.
What would NextEra’s Dominion acquisition mean for Northern Virginia’s data center pipeline?
Power grid capacity is one of the biggest constraints as the data center buildout continues in Northern Virginia–but that could change with NextEra’s $67 billion acquisition of Dominion Energy, announced on Monday. If approved by federal and state regulators, the acquisition would put one of the largest balance sheets in the U.S. energy sector behind the region’s data center corridor. NextEra’s investor presentation identifies Virginia as the “#1 global market for data center capacity” and projects $59 billion in average annual capital expenditure across the company through 2032, a portion of which would go toward the infrastructure that serves Northern Virginia. The questions for regulators and residents alike: Will that extra investment be enough to keep up with growing demand? And would a combined mega-company be more likely to reduce growing electricity costs for households through increased capacity–or raise costs further through market and regulatory capture?
-NextEra CEO John Ketchum framed the deal in sweeping terms on a call with investors:
Our country is at an inflection point. Demand for electricity is increasing unlike anything we’ve seen in generations. Today, energy infrastructure projects are larger and more complex than ever before. Practically every corner of America needs power solutions. Not someday, but right now. Speed-to-power is critical, so too is maintaining affordability and reliability for customers.
Commercial Real Estate
JCPenney mystery solved–and what the retail-to-experiences wave means for commercial valuations
Mystery solved: The sports field we reported was coming to the space being vacated by JCPenney at Springfield Town Center is likely for a new Dick’s House of Sport, per Washington Business Journal. “House of Sport” is an interactive athletics destination complete with turf fields, a track, climbing walls, putting greens, batting cages, and, in some cases, ice skating rinks–designed less like retail stores and more like community hubs for hosting events, birthday parties, and fitness classes. Another House of Sport is also coming to Tysons Corner.
-For the aging Springfield mall, this shows the owners are attempting to underwrite a turnaround story. The JCPenney space is owned by Meridian Group and Martin-Diamond Properties, while the larger mall is owned by PREIT.
-But it’s also emblematic of a larger trend: malls moving away from traditional retail and toward experiences. Tysons, which is facing “flight to quality” pressures from the newer Reston Station development, has recently welcomed Level99, an obstacle course venue, and The Escape Game. Fair Oaks Mall will soon welcome Sky Zone, a trampoline park, in the former Sears space, according to FFX Now. At Dulles Town Center, 810 Entertainment now offers bowling, arcade games, ax throwing, laser tag, and more.
-Tenants selling experiences do what traditional retail no longer can: They absorb large footprints in a single lease, generate multi-hour dwell times that lift surrounding tenants, and produce foot traffic on nights and weekends. The key question for commercial brokers and investors in Fairfax County is this: Will stabilized anchor occupancy translate to higher rents and improved valuations for surrounding retail stores? Or are these new experience tenants, which often negotiate heavily discounted rents in exchange for the foot traffic they promise to deliver, filling space without actually moving the needle on asset value? It’s something we’ll be tracking.
Openings & Closings
Back Nine Golf will bring indoor golf simulators to Reston Station, signing a lease for a 4,500-square-foot space at 1860 Reston Row. It will be adjacent to Ebbitt House, the soon-to-open expansion of D.C.’s iconic Old Ebbitt Grill.
Another Broken Egg Cafe will open a new location at 10645 Braddock Road, in the University Mall near George Mason, FFX Now reports. The Florida-based franchise offers a Southern-inspired brunch menu.
Residential Real Estate
County begins planning redevelopment of Tysons office buildings into mixed-use or residential
The “mixed use” wave may soon begin swallowing older office buildings along the outskirts of Tysons, with the county kicking off a new planning study this week. From the news release:
Specifically, the study will focus on office designated areas generally located along the edges of Tysons, including areas near the Capital Beltway, Dulles Toll Road, south of Old Courthouse Road and the MITRE campus. While these sections are currently designated for office use, the study is evaluating a broader mix of potential uses, including residential and mixed-use development. New recommendations will also consider updated guidance for transportation, parks and open space, environmental sustainability and urban design.
For sale: Dan Snyder’s estate on the Potomac. Price: $49.9M
Former Washington Commanders owner Dan Snyder has listed his home on the Potomac River for $49.9 million–the second time the property has hit the market since he acquired it for $48 million in 2021. The listing agent is Michael Sobhi of the Sobhi Group. The property–7979 E. Boulevard Dr., an Alexandria-addressed home in Fairfax County– is a 16,000-square-foot, eight-bedroom estate called River View, situated on the original grounds of George Washington’s Mount Vernon, per Zillow.
-This is one to watch: Properties like this don’t come on the market often, and it will be a defining comp for the ultra-luxury market–setting a marker that agents will cite for years to come. Snyder previously tried to sell the home in 2024 with Heather Corey of TTR Sotheby’s, according to Virginia Business, which first reported the listing. The ask price then was closer to $60 million, or about $10 million more. The brokerage switch and the ask reduction could mean Snyder is feeling motivated. A sale at or near ask would signal strength; a further reduction or a second failed listing would signal something more concerning about the ceiling for Northern Virginia ultra-luxury.
Developer secures $175M to build apartments by Vienna Metro
Insight Property Group has obtained $174.6 million in funding to redevelop the Hunters Branch office park into a 452-unit apartment building by the Vienna Metro, Bisnow reports. The development will also include 76 townhomes, built by Toll Brothers.
–Insight Property Group will also build a 304-unit residential development at 1950 Gallows Road in Tysons, in a joint project with Southern Management, FFX Now reports. The project was approved on Tuesday by the Board of Supervisors.
Leaderboards
Covers 5/11-5/17 | Data from Redfin
Top Sales by Price
Price: $3,050,000
Listed by Mark McFadden and Hunter McFadden of Compass
Bought with Christopher Leary and Robert Hryniewicki of TTR Sotheby’s
Price: $2,900,000
Listed by Megan Fass of EXP Realty
Bought with Ben Fitts of Coldwell Banker Realty
Price: $2,750,000
Listed by Sam Sterling of TTR Sotheby’s
Bought with Jillian Keck Hogan of Corcoran McEnearney
Price: $2,750,000
Listed by Anne DiBenedetto of Compass
Bought with Trey Grooms of EXP Realty, LLC
Price: $2,700,000
Listed by Claudia Kern of Compass
Bought with Deirdre Wildman of Pearson Smith Realty
Top Sales by Price Per Square Foot
Price: $2,007,900
Sf: 1,859
Listed by Jennie Mann and Miriam Fernandez of McWilliams/Ballard
Bought with Jody Kotler of Long & Foster
Price: $650,000
Sf: 768
Listed by Brian Klotz of TTR Sotheby’s
Buyer unrepresented
Price: $1,220,000
Sf: 1,642
Listed by Kerry Fortune of Washington Fine Properties
Bought with Sameer Yousaf of Real Broker
Price: $605,000
Sf: 840
Listed by Lynn Tsao and Michelle Giannini of Hoffman Realty
Bought with Christopher Urick of Samson Properties
Price: $550,000
Sf: 800
Listed by David L Smith and Patty A Smith of Compass
Bought with Geri Deane of Hunt Country Sotheby’s International Realty