Blackstone Inc.’s data center arm QTS is walking away from what would have been the largest data center campus on earth. In a withdrawal notice filed at the Virginia Supreme Court on Thursday, July 2, lawyers for QTS told the court the company had decided to terminate the Digital Gateway project and pull its associated filings. The move ends a years-long legal fight over a 2,100-acre site in Prince William County and hands a clear defeat to the developer and its parent, private equity giant Blackstone.

The project, known as the Prince William Digital Gateway, was enormous. Plans called for up to 37 data center buildings and more than 22 million square feet of computing space along Pageland Lane, next to Manassas National Battlefield Park about 35 miles west of Washington. At full build-out it would have been the biggest data center complex in the world—a footprint roughly twice the size of New York’s Central Park, with power needs rivaling a small city.

QTS, which was developing the land alongside Compass Datacenters, said the decision came after careful consideration. The company noted the project had cleared years of planning, analysis, and public review, and had been approved by the Prince William Board of County Supervisors. QTS said the campus would have delivered tens of billions of dollars in capital investment, along with local tax revenue and thousands of construction and permanent jobs for the county.

The dispute goes back to December 2023, when the county board—then led by Chair Ann Wheeler, a Democrat who backed data centers—approved the rezoning after a marathon 27-hour public hearing at which more than 400 people spoke. Opponents sued almost immediately, arguing the county broke state and local rules governing public notice requirements and rushed the vote through before a new, more skeptical board took office.

The courts agreed. Last August, Prince William Circuit Court Judge Kimberly Irving ruled the rezonings void because of improper public notice. On March 31, the Virginia Court of Appeals unanimously upheld that decision. Two lawsuits drove the challenge, one led by the Oak Valley Homeowners Association and another by the American Battlefield Trust, a preservation group focused on the nearby Civil War site.

One by one, the project’s backers dropped out. Prince William County withdrew from the appeal in April under Chair Deshundra Jefferson, a Democrat and longtime data center critic, followed by co-developer Compass Datacenters. That left QTS as the last party still fighting. The company had filed its appeal to the Virginia Supreme Court on April 30, just hours before the deadline, but has now abandoned it.

“Truth and accountability prevailed today,” said Chap Petersen, the attorney representing local residents and the American Battlefield Trust. The Coalition to Protect Prince William County, which organized much of the opposition, told supporters that the rule of law and the common man had prevailed. Mac Haddow, president of the Oak Valley Homeowners Association, had earlier called the litigation something that never should have happened.

The fight was costly for taxpayers. Prince William County spent close to $2 million defending the rezoning before its board reversed course—a figure opponents repeatedly cited as public money spent against the county’s own residents.

The collapse is more than a local zoning story. It comes as the data center industry faces growing public resistance across the country. Communities from Virginia to the Midwest have pushed back on the strain these facilities place on power grids, water supplies, and electricity bills. In a June report, the U.S. Energy Department projected total U.S. electricity demand would rise about 2.15% in 2026, driven largely by a roughly 5% increase in commercial demand tied to data center growth.

The timing also fuels a broader debate over whether the AI infrastructure boom has run ahead of real demand. This week, reports that Meta Platforms was exploring ways to market excess computing capacity rattled investors already worried about overbuilding. A retreat of this size by a Blackstone subsidiary—on a flagship project it defended for years—does little to quiet those concerns.

For Blackstone, which manages more than $1.27 trillion in assets and has made data centers a centerpiece of its infrastructure and real estate strategy, the loss is a reminder that community opposition has become a meaningful business risk. Land deals, permits, and court challenges can now derail projects that once appeared certain to move forward. Several landowners who had signed agreements with QTS are already seeking to exit their contracts. The company says it remains committed to the region—but for the Digital Gateway, the project is over.

JBizNews Desk | Prince William County, Virginia
© JBizNews.com All Rights Reserved. Reproduction or distribution without written permission is prohibited.