PowerHouse Data Centers is building a new campus in Reno, Nevada, the latest developer to launch a large-scale data center project in one of the fastest-growing U.S. markets.

PowerHouse, a subsidiary of American Real Estate Partners, announced Friday that it has closed on the site of a planned 900K SF powered shell data center campus in the Tahoe Reno Industrial Center. The project is a joint venture with investment management firm Harrison Street, which has backed much of PowerHouse's previous development.

The campus is expected to support an initial 65 megawatts of capacity across three buildings by the end of 2025. It marks the first expansion beyond the eastern U.S. for PowerHouse and is the latest in a series of large data center projects underway in Reno.

PowerHouse so far operates one data center campus, a 54 MW facility in Ashburn, Virginia, that was leased to CyrusOne last year. The firm has three projects in its development pipeline in addition to the one in Reno.

In Northern Virginia, PowerHouse is building a 265 MW campus on the site of AOL’s former headquarters in Sterling, along with a 120 MW campus in Arcola. Both projects are expected to be at least partially operational within the next two years. The company’s only other project outside Northern Virginia is a 123.8-acre campus that could eventually see more than 2.5M SF of data center space in Charlotte.

PowerHouse is the latest data center provider to launch a large-scale project in a Reno market experiencing a digital infrastructure building boom. Tract, EdgeCore and Novva are all planning substantial campuses nearby in the Tahoe Reno Industrial Center. Apple also operates a facility in Reno, while Microsoft is developing a large property in nearby Silver Springs. Elsewhere in Nevada, Switch and Databank are developing hyperscale facilities in Las Vegas, while Google and AWS have built out cloud infrastructure across the state.

Reno, and Nevada more broadly, has been one the biggest beneficiaries of a trend that has seen a growing share of new development occurring outside of traditional data center markets.

Power shortages in the industry’s traditional hubs are driving the shift. As tenants struggle to secure the capacity needed to support cloud services and artificial intelligence, they have become increasingly willing to lease in locations that would have been unacceptable just months ago due to insufficient connectivity or latency.

In addition to the availability of low-cost power, Reno benefits from its proximity to major markets like the Bay Area, Los Angeles and Phoenix, making it a top alternative for developers and tenants shut out of those markets.

"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," Doug Fleit, co-founder and CEO of AREP and PowerHouse, said in a statement. "This is another important addition to our portfolio of data centers and we are extremely pleased to be continuing our relationship with Harrison Street as our partner in this venture."

CORRECTION, FEB. 1, 1 P.M. ET: A previous version of this story incorrectly described the ownership of PowerHouse. While Harrison Street has backed the development of PowerHouse’s portfolio through a joint venture, AREP owns 100% of PowerHouse. This story has been updated.