Iron Mountain Signs 72 Megawatt Lease at its Manassas Data Center

Iron Mountain Data Centers has signed a 72-megawatt lease for a tenant in Northern Virginia, the largest lease in the company’s history, the company said today.

The deal was finalized in the past month, and is not included in Iron Mountain’s 35 megawatts of leasing for the first quarter, which included a 27-megawatt lease for the company’s entire LON-2 facility in London.

The leasing success reinforces the positive trends for Iron Mountain’s data center business. In a profile earlier this week, we noted that the company has “emerged as a larger force on the data center landscape, building beyond its base of enterprise document storage customers.”

The Manassas deal is among a handful of transactions in data center history that have exceeded 50 megawatts. It’s part of a trend in which large hyperscale customers are seeking to reserve enough capacity for long-term growth, which translates into larger buildings and campuses.

It also reflects the super-sizing of cloud deals and data center campuses across Northern Virginia, the world’s most competitive market for cloud infrastructure. Hyperscale operators are seeking more runway for future growth, and many new projects provide 100 MWs of capacity or more.

Iron Mountain’s Manassas campus will now join that category as it builds new data center capacity to support its new client.

“This is a near build-to-suit type of agreement where we are responsible for leasing on a long-term basis the land, the shell and a large portion of the installed mechanical electrical plant,” said William Meaney, President and CEO of Iron Mountain, on an earnings call Thursday morning. “Iron Mountain’s data center solution met the security, scalability and interconnection requirements of the customer in this critical global data center market.”

The lease is expected to commence in 2024 and has a term of 15 years, Meaney said.

The huge lease led Iron Mountain to raise its guidance on new leases for 2022 from 50 megawatts to 130 megawatts, said Chief Financial Officer Barry Hytinen. The company also added $100 million to its capital expenditures for 2022 to reflect the construction of the built-to-suit in Manassas.

“To provide some historical context to that, we leased 10 megawatts in 2018, 17 megawatts in 2019, 31 megawatts in 2020, excluding our joint venture in Frankfurt and
49 megawatts last year,” said Hytinen. “With the strength of our performance in the first quarter, we now project full-year data center revenue growth of at least 20% year-on-year, with even higher rates of growth for storage.”

The Manassas campus includes two existing data centers:

• VA-1, a single-story facility built in 2017 with 10.5 megawatts of power capacity.
• VA-2, a $225 million two-story data center built in 2020 with 36 megawatts of capacity. The building was initially sized at 30 MWs, but increased after a 20-megawatt lease to a large customer.

The 80-acre campus has enough land to accommodate two more data centers. Iron Mountain recently boosted the potential capacity of future phases of its Northern Virginia operations to 222 megawatts, up from 103 MWs in the prior quarter.

Meaney says the huge new lease will “allow us to build further infrastructure on that site, bringing a (power) substation onto the campus, which is going to drive benefits, both in terms of upscaling the capacity, but also the cost to deliver on that campus,” said Meaney. “There’s a number of different pieces there that make this deal very attractive, and we’ll give you more information on the second quarter call.”

Iron Mountain’s global data center business revenue increased 36.4% in the first quarter, or a 38.1% increase compared to the first quarter of 2021, excluding the impact of currency shifts.