Kuhn Emerges as a Mover in Cloud Computing Land Deals

STERLING, Va. – Chuck Kuhn didn’t set out to become a major player in the data center real estate market. Kuhn says he was just trying to build warehouses to expand the logistics operation for his fast-growing moving company.

But as he soon learned, when you own prime land parcels in Loudoun County, data center operators will beat a path to your door.

It started when Kuhn purchased a property in Sterling not far from the headquarters for his businesses, JK Moving and CapRelo.

“As soon as I settled on the land, I started getting calls from data center companies,” Kuhn recalls. “By the time I got the fifth or sixth call about selling the site, I began to pay attention. We wound up selling that site to a data center company.”

Kuhn still needed a warehouse, but the process repeated itself with the next two properties he bought, as each was acquired by data center developers ready to pay a premium for development sites near “Data Center Alley” in Ashburn.

“By that time, I thought I should get a stronger understanding of the exponential growth of these data centers, and figure out how we could better serve this market from a land perspective,” said Kuhn.

Over the last six years, Kuhn and his real estate business, JK Land Holdings, have done about a dozen transactions with data center companies, provisioning land that became cloud campuses for Microsoft, Amazon Web Services and CyrusOne. Kuhn has another half-dozen sites that are in the study phase or pending closure for data center use.

Building on its success in Northern Virginia, JK Land Holdings is expanding its site selection business, and is now acquiring properties in other leading data center markets, Kuhn said.

“It’s a fast-paced, challenging industry,” said Kuhn. “But it’s been exciting and it’s been rewarding. The demand is higher than I’ve ever seen it.”

The Cloud Needs More Land

Northern Virginia is a hotbed for “land banking” – provisioning sites for future data centers for hyperscale operators like Amazon Web Services, Microsoft, Google and Facebook, along with dozens of multi-tenant service providers. The region boasts the world’s largest concentration of servers for cloud computing, with nearly 250 data centers.

This growth has sparked a data-driven land grab around Ashburn, which sits atop the world’s densest intersection of fiber networks, making it an ideal location to store and distribute data. Land values have soared past $2 million an acre in Ashburn and recently topped $1 million an acre in Prince William County.

As prime parcels have grown scarce, Kuhn has demonstrated a knack for sourcing sites for data center development. Recent transactions in Northern Virginia reflect Kuhn’s growing visibility in the data center real estate:

• In July, Microsoft bought 92 acres of property in Prince William County from JK Land and another Kuhn entity for about $95 million.
• In June, JK Land Holdings acquired 270 acres of land for data center developer Yondr, which plans to deploy 500 megawatts of capacity at campuses in Loudon and Prince William counties. “Our partnership with JK Land Holdings and support from both county governments will allow our clients to grow at scale in this metro.” said Éanna Murphy, Senior Vice President of Operations, Americas at Yondr Group.
• Kuhn and JK Land have been tied to several transactions in the growing Dulles Cloud Corridor adjacent to Dulles Airport, including deals in Arcola supporting data center development for Amazon Web Services and Microsoft.

A moving company may seem like an odd entry point for the data center industry. But his experience with JK Moving has provided Kuhn and his team with deep experience in logistics and storage. Kuhn has also benefited from his familiarity with Loudoun County and its real estate scene.

“It’s been very helpful that I was born and raised in Northern Virginia,” said Kuhn. “I’ve lived in the community here for 55 years. We know a lot of the business owners and landowners, and we know a lot of the brokers. Being locally based has been very helpful, and has kept us familiar with the Loudoun, Prince William and Montgomery County (Md.) area.

“It’s also helped to spend time with a number of the hyperscalers and colocation companies to understand what’s important to them,” Kuhn added. “This has helped us understand the market,”

From Corporate Relocation to Data Centers

Kuhn has been building businesses since he launched JK Moving as a 16-year-old, seeing an opportunity to improve on miserable moving experiences for his family as they relocated internationally for work. Kuhn learned the business from his aunt and uncle, who owned a small moving business, and bought his first moving van shortly after getting his driver’s license.

JK Moving Services has grown steadily into the largest independent moving company in the U.S., specializing in corporate relocations. JK Moving and CapRelo handled storage, logistics, moving and real estate services for large companies and the federal government. Kuhn’s firms have provided moving services for three presidents (both Bushes and the Clintons), and in 2006 President George W. Bush gave an economic policy speech from JK Moving’s headquarters facility in Sterling.

With the rapid appreciation in Loudoun land values, Kuhn and his companies have made substantial gains through deals to support data center operators. That has enabled JK Land Holdings to place more than 22,000 acres of land into conservation easement, ensuring their long-term preservation.

“My family and I are very passionate about preserving open space,” said Kuhn. “Balance in development is near and dear to me.”

It’s a strategy that reflects life in Loudoun County, where data centers and the new Metro line fuel active development in the Eastern half of the county, while Western Loudoun is known for farms, wineries and views.

Data Centers vs. Other Industrial Uses

The rapid growth of the data center industry has created some tensions in Northern Virginia. Given his mutual interests in data center real estate and preserving open space, Kuhn has been an interested observer in some of the recent debates about data center growth and its impact on quality of life in the region.

“When some of these communities push back on data centers, I don’t really understand it,” said Kuhn. “If you had a choice of a moving company or a storage company or an Amazon delivery center as your neighbor, I’m not sure why you’d want any of those instead of a data center.”

Data centers bring far less traffic than most other industrial sites, Kuhn said, and have made progress from the challenges with visual design that drew critiques from Ashburn residents.

“Now that some design standards have been introduced, the data center buildings are tasteful and well designed, especially compared to a distribution center,” said Kuhn. “I would choose a data center as a neighbor over an industrial building any day.”

Earlier this year, JK Moving launched a new division to offer commercial services for data centers, including relocation services for employees, migrating customers, installing racks and batteries, and  rigging and storage.

“Relocating, consolidating, or refreshing critical environments can yield challenging logistics that require intense project planning and risk mitigation strategy,” said Tucker Gladhill, who recently joined JK as director of technology services.

Kuhn said JK Land Holdings is also conducting site selection and acquiring properties in other leading data center markets in North America.

“The Washington D.C. area is our core focus, but we own a number of sites in Ohio and are currently expanding into Atlanta, Montreal, Arizona and California,” said Kuhn. “We are moving into some of these other markets at the request of some of the other companies that we work with.”