Brookfield-backed Compass Datacenters is walking away from a massive Northern Virginia data center project

The Brookfield-backed firm spent tens of millions of dollars on the 2,100-acre PW Digital Gateway project before courts voided its zoning approvals

ANDREW CABALLERO-REYNOLDS / Getty Images

Compass Datacenters is abandoning its portion of the PW Digital Gateway project in Prince William County, Virginia, after a state appeals court upheld a ruling that the development's zoning approvals were invalid.

"Compass has reached the unfortunate conclusion that we cannot move forward with the Prince William Digital Gateway project," Compass president AJ Byers said in a statement. "Recent legal actions and compounding regulatory hurdles have effectively closed a viable path forward."

Backed by Brookfield Asset Management, Compass had invested tens of millions of dollars over several years in its bid to win county approval for a portion of the corridor exceeding 800 acres, Bloomberg reported. Compass will not appeal the most recent court ruling, Byers confirmed.

At full build-out, the Digital Gateway was envisioned as approximately 37 buildings, making it among the earliest proposed campuses designed at gigawatt scale. Compass's footprint was slated to reach up to 11.55 million square feet, with Blackstone-backed QTS targeting around 11.3 million square feet on a neighboring tract. Together, the companies sought to build one of the largest data center hubs in the world.

Legal challenges to the December 2023 zoning vote — a session that stretched 27 hours as supporters and opponents packed the room — centered on a notice requirement: local code mandates at least six days between the first two newspaper advertisements for such a hearing, a gap critics said was never met. A Virginia judge agreed, revoking the zoning authorization, and an appeals court upheld that ruling earlier this month.

Prince William County had also confirmed it would not appeal, having spent more than $1.7 million in legal fees defending the project. According to Bloomberg, ongoing disagreements at the state level over how generous data center tax incentives should be also figured into the company's calculus to exit the project.

QTS has not yet decided whether to appeal to the Virginia Supreme Court. The deadline to petition is April 30, according to Data Center Dynamics. Bloomberg reported that QTS intends to challenge the ruling.

The project drew sustained opposition from residents and preservation groups throughout its planning. Critics cited the development's proximity to a Civil War battlefield, potential environmental impacts, and concerns about the effect on property values in the rural area. The chair of the Prince William County board of supervisors was unseated in 2023 by a candidate who campaigned against unchecked data center growth.

A separate legal dispute has emerged between QTS and a group of landowners who want out of their purchase agreements. Among them is Mary Ann Ghadban, a Pageland Lane property owner who was an early champion of the project; her federal lawsuit, filed in the Eastern District of Virginia, contends that QTS violated its obligations by completing a transaction with just one family while leaving other sellers without a closing. QTS, operating through an acquisition entity, responded with its own suit alleging the landowners are improperly trying to walk away from binding contracts.

"For the past two and a half years, we have stood up for not only threatened hallowed ground, but for the rule of law," said David Duncan, president of the American Battlefield Trust, in a statement. "We call on QTS to follow the lead of Compass and the Prince William County Board of Supervisors and finally put an end to this nightmare."

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