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Phoenix Market Growth Built on Solid Investment and Low Risk

3 April 2019
Phoenix Market Growth Build on Solid Investment and Low Risk

Phoenix is in the middle of a data center building boom. It’s now the sixth-largest market for data center capacity in the US, on the heels of Northern Virginia and Silicon Valley. Phoenix is currently home to 1.61 million square feet of commissioned data center space. Growth trends in 2018 also indicate that it is poised to join the top five markets in hyperscale computing during 2019. 

A 2018 Data Center Frontier report attributes this surge in demand due to several factors. Phoenix has low natural disaster risk, with almost no history of damage associated with seismic, tornado or flooding events. Power costs in Arizona are also well below the national average, particularly in comparison to the crowded Northern California and Los Angeles data center markets. Phoenix’s abundant sunshine is a double-edged sword: it offers an almost year-round supply of ‘green’ energy, but it also requires more electricity to cool data centers during days over 100 degrees Fahrenheit.

In an effort to make Phoenix more attractive to data center developers, Arizona offers 10-year tax breaks on both data center equipment and labor services. To further sweeten the deal, data center projects that qualify as Sustainable Redevelopment Projects are eligible for an additional 10-year waiver on sales taxes. Compared to nearby primary data center markets, Phoenix has built a reputation for itself as a solid investment and attracting some of the industry’s biggest names.

EdgeCore  

In Q1 of 2018, Denver-based EdgeCore Internet Real Estate broke ground on their Phoenix campus, located at Mesa’s Elliot Road Technology Corridor, just next to Apple’s data center. EdgeCore’s campus will eventually have seven buildings of more than 1.25 million square feet at full buildout, totaling approximately 224MW of commissioned power and 980,000 square feet of commissioned space.

According to Ryan Oro, Senior Vice President of Revenue, EdgeCore is investing more than $150 million in the project, with an additional $150 million investment planned by customers building out their space in the new campus. EdgeCore is planning $2 billion in data center development in Phoenix.

Digital Realty

Digital Realty, the largest wholesale data center provider in the world has a four-story, multi-tenant facility with 10.0MW of commissioned power at East Van Buren in downtown Phoenix. Its other data center at South Price in Chandler is a 519,000 square foot facility that has delivered 36.2MW of commissioned data center space.

Digital Realty has three other development opportunities in Phoenix — one in Tempe and two in Chandler. In Q2 of 2017, Digital Realty merged with DuPont Fabros, absorbing DuPont’s data centers and 56 acres of Phoenix land.

Vantage

Santa Clara-based Vantage Data Centers has acquired a 50-acre site for $12.76 million in Goodyear, Phoenix, to build a mega-scale data center campus. The 160MW facility will house three data center buildings totaling more than one million square feet. The first data center is expected to be online in early 2020.

CyrusOne

Dallas-based CyrusOne, which has 40 data centers worldwide in its portfolio, has invested heavily in capacity in the Phoenix market. The company owns a 57-acre site in Chandler, which consists of two separate data center buildings that can produce 90MW of critical power at full buildout.

In June of last year, CyrusOne acquired 70 acres in Mesa for its second Phoenix facility, which will have five buildings that will deliver up to 198MW of critical IT power. The new campus is located within the Mesa Elliot Technology Park, a 270-acre master-planned mixed-use project.

Cloudscene Rankings

Building your business in Phoenix? Check out the Cloudscene ranking for the top operators and service providers for Phoenix with Cloudscene’s rankings tool.

Largest Data Center Operators (based on the number of operated data centers in the market)

RANKING
1 Digital Realty View Digital Reality Profile
2 Cyxtera View Cyxtera Profile
3 Verizon View Verizon Profile
4 CenterServ View CenterServ Profile
5 Level 3 Communications View Level 3 Communications Profile

 

Top Service Providers (based on the number of PoPs in the market)

RANKING
1 Zayo View Zayo Profile
2 CenturyLink View Century Link Profile
3 Level 3 Communications View Level 3 Communications Profile
4 Cogent Communications View Cogent Communications Profile
5 Cox Communications View Cox Communications Profile

 

You can also set alerts to stay on top of new developments in any market, including Phoenix on the Cloudscene market profile page.

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