There is a growing trend in Arizona of putting unassuming, unnamed, practically unrecognizable buildings to use. Are they warehouses? Sort of. The growing trend is that of data center development in the state, and it’s booming.
The Phoenix area is ranked as the second-most active data center market with new construction in the country, according to CBRE’s Data Center Trends Report. Rows of unassuming warehouses are being repurposed into new data centers, like what Apple is doing in East Mesa with its developing data center project. And some companies, like Microsoft, are opting for buying up giant plots of land to build new data centers from the ground up.
Last year, specifically the second half of last year, Phoenix recorded a record level of 41.6 megawatts of net absorption. Northern Virginia, which still holds a contract to build a new Amazon headquarters, comes in at first place, high on the list with 17.5 megawatts.
Phoenix is landing contract after contract for land acquisitions, seeing the highest demand to build future data center developments. According to the report, about 900 acres of land in metro Phoenix has been bought up by data center developers in the last two years. This represents about 15 million square feet of planned data center buildings, something unseen in other parts of the country, except northern Virginia.
“These data center land investments will increase company interest in the metro area, which is very good for the economy. With data centers come other industries, primarily office-centric requirements,” Mark Krison of CBRE said.
When it comes to data center markets as a whole, Chicago and Dallas have the most supply and demand in the country. Arizona is projected to land the third spot on that list within the next few years, moving up from fifth in the nation currently.
According to Krison, besides national tech companies gobbling up land, it’s local companies, like APS and SRP, that provide a growing power grid, and an attractive Arizona tax incentive for data center developers that allows for money savings. Plus, the Phoenix area’s temperate weather is another boost.
Phoenix has seen a growing interest in the data center market, especially as the country plans to upgrade cellular data to 5G. What’s more, online gaming and streaming services, and big data analytics all play a part as they require immense storage for data. This will help to move information along quicker and more efficiently as well as collect more data and make for faster services.
Currently, the greater Phoenix area is balancing a lot of data center development projects that will come to fruition in the next few years. In Goodyear, Vantage Data Centers, a Santa Clara-based company, will build a 49-acre center; CyrusOne, which already has a center in Chandler, will expand to another location in Mesa this summer; and Boston-based Iron Mountain is currently in the middle of a $430 million, three-story data center in east Phoenix.