PowerHouse joins data center land rush in region

Northern Nevada’s emergence as a haven for data center development recently took another step forward with the announcement from PowerHouse Data Centers to develop a 900,000-square-foot shell facility on 49 acres at Tahoe Reno Industrial Center.

PowerHouse Data Centers, a fully-owned subsidiary of American Real Estate Partners of McLean, Virginia, expects to bring the 65-megawatt data center online in late 2025, said Karen Petersburg, PowerHouse’s vice president of data center development and construction.

“We just love Northern Nevada for a lot of reasons,” Petersburg said. “It's become somewhat of a mecca of data center companies and operators that have been there, are going there, or are already there now. It really drew us for that reason, but also because of the business-friendly aspects of the area. It’s very business friendly with the tax incentives, and they have made it very easy for developers with quick permitting.”

PowerHouse Reno is one of the company’s first ventures outside of Virginia, where PowerHouse is developing more than 700 megawatts of powered data center shell space in Northern Virginia’s Data Center Alley at Ashburn. PowerHouse Reno is located at the junction of Britain Drive and Waltham Way and consists of three two-story buildings of 300,000 square feet, with each building a mirror image of the others. A dedicated substation will be constructed onsite and connected to the NV Energy power grid, Petersburg said.

General engineering contractor F&P Construction will perform site work and mass grading once the project is finalized, Petersburg said. Tectonics Design Group has been instrumental in helping PowerHouse executives understand the region’s unique topography and site challenges, she added. Primary sitework challenges include extensive blasting to create level spaces for vertical development.

“Tectonics and F&P have been a great team,” Petersburg said. “They’ve been able to really help us work through the design and layout of the buildings, knowing where the grading slopes are the steepest, and understanding the site constraints from a square-footage factor because the topo is just so rocky and all over the place. They’ve been phenomenal.”

HITT Contracting of Washington, D.C., is the general contractor for the project. Petersburg said PowerHouse worked with several consultants who helped the company find the right Northern Nevada-based subcontractors for its project.

“They help us understand who the right local players are to look for and go out to bid,” she said. “We're really trying to work with the local communities and the local subcontracting pool first to supply the resources and the labor we need to build our facility.”

Northern Nevada is uniquely positioned for additional data center development due to its low costs for power and strong fiber network, Petersburg told NNBW.

“What we really look for when we’re doing site development is where the fiber is,” she said. “Where this particular project is located has both short- and long-haul fiber, and those fiber networks that are there are key for some of the customers we’re looking to lease our buildings to.

“It’s also about power,” Petersburg added. “Reno is now a little power-constrained, but we’ve got 65 megawatts coming in 2025, so we’re really looking to make sure we’re capitalizing on that and helping our customers get their businesses up to scale as quickly as possible.”

Potential customers include hyperscalers and AI users, Petersburg added. Ideally, PowerHouse Reno will be leased to a single tenant, but the facility could be split if necessary.

PowerHouse Reno is one of a handful of companies that have announced plans for data center development at Reno Tahoe Industrial Center. Google, Apple and Switch, meanwhile, have operated data centers at or near TRIC for years.

Demand for data centers is so robust that new facilities are being snapped up by cloud service providers (also known as hyperscalers) as soon as they are completed, Petersburg told NNBW. The unprecedented growth of artificial intelligence is also driving the need for additional computing facilities, she added.

“Demand for AI is so great that the growth percentage can’t be quantified,” she said. “It’s just skyrocketing, and it will until people really understand what AI’s needs are and what that looks like. It’s also a work in progress. The chips are changing, technology is evolving, and it’s basically unlimited right now.

“What’s going to cause problems in the future is when we run out of power,” Petersburg added. “Until that happens, projects are going to continue moving forward. If you’ve got buildings, land and fiber, it’s a no-brainer; it’s happening.”

Doug Fleit, co-founder and CEO of AREP and PowerHouse, said in a statement that PowerHouse Reno is an important addition to his company’s growing portfolio of data centers.

“As the growth of AI throughout all industries continues to push hyperscale demand roll out, sites like PowerHouse Reno will serve the market with near-term power delivery at attractive costs with reliable renewable energy components,” Fleit said.

PowerHouse Reno is a joint venture between PowerHouse Data Centers and Harrison Street, a Chicago-based investment management firm exclusively focused on alternative real assets. Michael Hochanadel, managing director and head of digital for Harrison Street, said in a statement that the expansion of the PowerHouse platform into Northern Nevada is an important step to address the challenges facing leading technology firms.

“PowerHouse is well positioned to capitalize on evolving customer requirements, and our Reno location aligns with the needs of the market. We look forward to further expansion across the U.S. in the future,” Hochanadel said.