Starwood Capital Group is transforming an 8‑acre site in Herndon, Virginia — once used as a training ground for an NFL franchise — into a new data center campus. The development expands the company’s footprint in one of the nation’s busiest data‑center corridors, signaling growing demand for digital infrastructure and renewed investor interest in industrial real estate. For investors, developers, and regional planners, this project underscores how underused properties can deliver modern tech‑infrastructure value.
What the Herndon Project Is and Why It Matters
Starwood plans to build two data‑center facilities on the former training facility property, officially dubbed “Word of Grace Data Centers.” The first building, “Building E,” is slated for 406,000 square feet. The second building, “Building F,” has yet to have its square footage disclosed. These new centers will sit adjacent to Starwood’s existing 60‑acre Renaissance Technology Park, which already supports multiple data‑center properties.
This expansion extends Starwood’s established data‑center campus and reinforces Northern Virginia’s reputation as a leading hub for digital infrastructure. That reputation springs in part from its proximity to major network backbones and energy infrastructure — critical for high-capacity data operations. As digital demand rises, properties like the Herndon site become increasingly valuable.
How the Site’s History Adds Strategic Value
The Herndon property once served as a training ground for a major NFL franchise in the 1970s and ’80s. Later owned by a church, it became vacant or underused. Starwood acquired the land in 2023 for roughly $25 million — a bargain relative to typical infill industrial sites near the D.C.–Virginia tech corridor.
Repurposing this brownfield-like location offers multiple advantages: existing access roads, proximity to utilities, and minimized environmental remediation compared to undeveloped land. For developers and investors, such adaptive reuse projects can provide lower acquisition cost and faster path to operation compared with greenfield builds.
Implications for Regional Commercial Real Estate and Investment
This data center build adds to a broader trend in commercial real estate: shifting demand toward industrial and infrastructure assets. As cloud, AI, and large‑scale computing demand increases, investors are seeking stable, long‑term yield from data‑housing facilities rather than traditional retail or outdated office buildings. The Herndon project illustrates a strategic pivot in real estate asset allocation.
For property investors, data centers offer distinct advantages: long lease terms, predictable cash flows, and demand tied to digital infrastructure rather than consumer cycles. Plus, sites like Herndon — on repurposed land — often involve lower entry costs. That makes them attractive options in a market where land supply is limited and industrial zoning is tight.
The data center boom could impact nearby housing markets. As workers, security staff, and maintenance crews move in, demand for local housing could increase — potentially boosting both rental and resale property values. Investors with a diversified portfolio of industrial and residential properties may find this dual‑benefit scenario appealing.
Risks and Considerations for Investors and Planners
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While data centers offer steady returns, they come with risks that must be managed carefully. First, power consumption is intense — data centers often require high-voltage grid connections and backup generators. In regions like Northern Virginia, rising demand from data centers has already sparked grid capacity concerns and scrutiny from regulators.
Second, environmental and local community impact can stir resistance. Issues like noise, emissions from backup generators, and increased traffic during construction or maintenance phases could affect nearby residents. That may invite regulatory scrutiny or even public opposition, especially in tighter suburban or semi‑rural zones.
Third, the ongoing shift in technology — such as edge computing, cloud‑native infrastructure, or decentralized architectures — might change demand patterns. While large data centers remain critical today, evolving tech could reduce reliance on massive centralized facilities over time. Investors should evaluate long-term demand risks, not just near-term yield.
What the Herndon Conversion Means for CRE Strategy in 2026
For CRE investors looking at 2026 and beyond, the Herndon project offers a few strategic takeaways:
Data center campuses can serve as anchor industrial investments, holding value independently of retail or office market cycles.
Adaptive reuse of existing properties — even former sports or institutional sites — can yield strong returns while adding new functionality and value.
Investors should weigh infrastructure and regulatory risk — particularly in regions with strained power grids or environmental scrutiny.
Diversification across industrial, residential, and infrastructure‑adjacent properties may help capture both real estate upside and stable yields.
At a time when many segments of CRE remain uncertain, large scale data‑center developments like the one in Herndon may present some of the most resilient and forward-looking opportunities.
This Herndon expansion shows how industrial real estate can evolve — turning old fields into critical infrastructure. For investors willing to navigate complexity, that can offer real long‑term value.
