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Greater Phoenix Market Overview

The Greater Phoenix Metro area experienced a surge of activity throughout 2019 including an increase of supply potential for more development across the current data center landscape. There are a handful of providers in the market looking at development plans in both Mesa and Goodyear, with some already under construction.

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Expansion

Aligned Energy Phoenix

2500 West Union Hills

Aligned Energy is an infrastructure technology company that offers colocation and build-to-scale solutions to cloud, enterprise, and managed service providers. Our intelligent infrastructure allows us to deliver data centers like a utility — accessible and consumable as needed. By reducing the energy, water and space needed to operate, our data center solutions, combined with our patented cooling technology, offer businesses a competitive advantage by improving reliability and their bottom-line.

Digital Realty Phoenix

120 East Van Buren Street

19 carriers/providers currently serve the 288,000 square foot building, and Digital Realty serves as the premier interconnection area operator at the facility. It performs the vital function of connecting core infrastructure of many enterprises to several west coast cities and global points.

Flexential

1850 West Deer Valley Road

The Phoenix - Deer Valley data center offers ample colocation and connectivity services for any business. The data center features 2(N+1) UPS redundancy and N+1 redundant, energy-efficient cooling within the 5.02 MW Facility. This location has a focus on small to medium sized businesses. 

H5 Data Centers Phoenix

2600 West Germann Road

H5 Data Centers' Phoenix data center is a purpose-built, state-of-the-art Tier III facility designed to provide industry-leading energy efficiency and privacy. The data center is in the Arizona Technology Corridor and can total up to 180,000 square feet and 20 MWs.

INAP

2500 West Frye Road

INAP is capable of fulfilling many colocation services, from cages to private suites, remote hands and more INAP's 3 MW across the valley is suitable for any need. Low cost of power, favorable taxes and a slim chance of natural disaster makes Phoenix colocation ideal. Secure, stable, affordable and providing high connectivity, INAP’s Phoenix data centers are the perfect home for a disaster recovery environment. INAP’s Phoenix colocation data centers connect to Dallas and Los Angeles via their reliable, high-performing backbone.

Digital Realty Chandler

1900 South Price Road

2121 South Price Road is the largest data center in Arizona, totaling approximately 519,000 square feet with 34 MW of critical IT power. The building has a substation capable of providing up to 60 MVA of power to clients ranging from financial services and retail to cloud/IT services and social media platforms.

CyrusOne Chandler

2335 South Ellis Street

The nation’s largest data center campus sits on 85 acres slated to ultimately support nearly 2 million square feet of data center space in Chandler, Arizona. With 3 buildings already built and 7 more on the way for a total support of 90 MW for the campus, CyrusOne Chandler will be one of the largest Data Center campuses in Arizona.

Cyxtera PHX1

615 North 48th Street

Located just 10 minutes from Phoenix Sky Harbor International Airport and 15 minutes from downtown Phoenix.16 MW of power and a 52 MW power generator. 

Cyxtera PHX2

2055 E Technology Cir

Located less then 20 minutes from Phoenix Sky Harbor this 6.8 MW facility supports 34,000 square feet of raised floor space. PHX2 is one of Cyxtera's newest facilities, just a short 12 mile drive from PHX1. 

EdgeConneX PHX01

3011 South 52nd Street #107

The Phoenix EdgeConneX Edge Data Center® (EDC) has been purpose-built and precisely located in order to provide a secure colocation facility for customers wishing to deliver content and applications to local-market consumers, with the lowest possible latency. Located less than 20 minutes from downtown Phoenix.

DataBank Phoenix PHX1

3110 North Central Avenue

DataBank’s downtown Phoenix, data center facility provides 800 kW of on-site power, a 2N power design, and N+1 cooling for the ultimate in uptime assurance. DataBank’s 8,200 sq. ft. Phoenix colocation facility is a carrier-neutral interconnection hub with access to 14+ on-site carriers

DataBank Sky Harbor PHX2

615 North 48th Street

DataBank’s Sky Harbor data center facility (PHX2) is located just a 10-minute drive from the airport and provides 200 kW of on-site power, a 2N power design, and N+1 cooling for the ultimate in uptime assurance. DataBank’s 3,500 sq. ft. Sky Harbor colocation facility is a carrier-neutral interconnection hub.

DataBank Chandler PHX3

2121 South Price Road

Located 30 minutes from Phoenix, DataBank’s Chandler Arizona data center facility (PHX3) provides an N+1 power design, and N+1 cooling for the ultimate in uptime assurance. DataBank’s 3,500 sq. ft. Chandler colocation facility is a carrier-neutral interconnection hub with access to 25+ on-site carriers and many Internet, fiber, interconnect, and cross-connect options.

Iron Mountain AZP-1

615 North 48th Street

Situated in a 39-acre campus just 10 minutes east of downtown Phoenix, AZP-1 is a 588,669 ft2, 41 MW Tier III-certified data center, purpose-built on Arizona’s primary hub for east-west internet traffic.

Iron Mountain AZP-2

4802 E Van Buren St

AZP-2 is a hyperscale-ready data center powered by 100% renewable energy. The facility will feature 309,066 SF and 48 MW of max IT load at full build out. Part of a 3-data center, metro-connected campus, AZP-2 is located 10 minutes east of downtown Phoenix.

Iron Mountain AZS-1

8521 East Princess Drive

AZS-1 is one of three Iron Mountain data center facilities in the Phoenix area, offering 121,000 ft2 of space and 5.7 MW of power, as well as in-house access to a wide variety of carriers and clouds.

New Developments

QTS Phoenix DC1

1200 40th Street

Mega scale campus offers flexibility to meet rapid, large scale deployments. This campus provides significant capacity to support ongoing growth. QTS has a planned 42 MW and 186,000 sq. ft of data center space in DC1 of their 85 acre facility. When the facility is finished it will support a 280+ MW capacity. 

EdgeCore

3856 S Everton Rd

Located in the Elliot Road Technology Corridor of Mesa, EdgeCore’s campus is planned to ultimately support 225 MW. They currently own 25 acres with an option on an additional 25 acres. EdgeCore broke ground in March 2018 and is on schedule to deliver its first 68,000 square feet and 4 MWs of commissioned space by mid-year. The campus will have its own on-site substation with 56 MVA transformers and the ability to expand the critical load.

NTT Phoenix PH1

NW E Elliot Road and S Signal Butte Road

RagingWire Data Center recently acquired ±100 acres in East Mesa for data center development. RagingWire’s land is located on Elliot Road and in close proximity to Digital Realty, CyrusOne, and EdgeCore. RagingWire is currently the only data center provider with frontage on Elliot Road.

Stream Data Centers

2950 S. Litchfield Road Goodyear, Arizona 85338

Stream purchased approximately ±150 acres of land, including a 400,000 square foot building, on February 2019. The site is located just south of the Goodyear airport and adjacent to one of the three Microsoft’s sites. Stream has started construction on the roof of their existing building with 4.5 MW of turnkey capacity availible immediately and plans to support 40+ MW of critical load within a 418,200 SF space. 

Vantage Data Centers

45 S Bullard Avenue Goodyear, AZ 85338

Vantage purchased ±50 acres of land in December of 2018. The site is located on Van Buren and Bullard Avenue. Vantage is planning on constructing a hyperscale facility with their own designated substation. Vantage has 800,000+ Square feet of leasable on the way and 1,000,000+ planned for this 160MW facility. 

Compass

850 S Bullard Ave, Goodyear, AZ 85338

Compass Data Centers acquired approximately ±225 acres in two separate land deals in May of 2019. The site sits next to the land acquired by Vantage on Van Buren Street and Bullard Avenue. The Goodyear campus currently offers two Tier III certified buildings with 6MW and 32MW of capacity. Features include two on-site substations and three diverse fiber paths.

Hyper Stack Phoenix

150MW. 79 acres. Scale as big as the southwest. Phoenix is fast emerging as the next great market for data center development and access to major western and Southern California regions. With low-cost development and operations, robust available power options, and low natural hazard risk, it’s easy to see why this is now one of the top data center hubs in the United States.

Pricing

End-user favorability

  • Pricing across Greater Phoenix is favorable for end-users due to predicted downward pressure on wholesale colocation rental rates. Aligned Energy, CyrusOne, and Digital Realty, will be cost competitive in winning large requirements as they bring new supply.
  • Other national colocation operators entering Phoenix with development plans, such as QTS Data Centers, EdgeConneX, EdgeCore, Vantage, Stream, and Compass will produce an even more competitive landscape.
  • The Arizona Computer Data Center Program, which allows eligible tenants to have sales and use-taxes  abated, supported by the business-friendly climate in Arizona, creates tremendous desirability for companies headquartered in California where the cost to do business is far greater.This program just renewed until 2033.

Average Pricing

cost per kW

Cost of Power

cost per kWh

  • The cost of electricity across Greater Phoenix is $0.062 per kilowatt hour. With the power rates in Silicon Valley, California ranging from $0.11 to $0.15 per kilowatt hour, Arizona offers more than 50% in power cost savings.
  • APS & SRP rank as top business service providers delivering quality, reliable and redundant power service.

Power

Phoenix Energy Supply

  • Arizona’s diverse fuel supply mix decreases the risk of fuel unavailability, smooths our prices and safeguards against regulation.
  • The Palo Verde Nuclear Generating Station just outside of Phoenix is the largest nuclear facility in the country rated 3,937 net MW per year.
  • The Solana Generating Station supplies Arizona with 280 MW of electricity. Completed in 2013, Solana is the largest parabolic trough system in the world can store six hours of molten salt thermal energy for night time electricity production.
  • Arizona’s Renewable Environmental Standard requires 15% of the state’s electricity consumed in 2025 to come from renewable energy resources.
  • In 2014, 7.8% of Arizona’s electricity came from renewables, primarily form the Glenn Canyon and Hoover Dams.
 

Greater Phoenix Market Overview

53

53 wholesale & retail colocation data centers are located in the Greater Phoenix area.

The average transaction size in Greater Phoenix: 500 kW to 10 MW

20%

20 percent of the users are in the Tech Industry

274 MW of supply is under construction and 776 MW are planned.

End-user favorability

  • Multiple long-haul routes connecting Phoenix to California and the midwest
  • Arizona Computer Data Center (CDC) Program that abates sales and transaction privilege taxes for qualifying data center operators/developers and end user customers
  • State-of-the-art, highest availability power, water and telecommunicationsinfrastructure
  • Minimalist regulatory approach - no corporate franchise tax and constitutionally recognized as a Right to Work  state
  • High quality end users such as eBay, PayPal, GoDaddy, American Express, Charles Schwab, Oracle, Uber, Microsoft, Google, Meta (Facebook)and many others
  • Proximity to California and low cost of doing business
  • Diverse fuel mix including many renewable energy resources; Arizona ranked fifth in 2021 in solar energy generation
  • Ranked in the top 10 for low catastrophic and natural disasterrisk
  • APS and SRP rank as top business service providers delivering quality, reliable and redundant power service
  • Highly skilled, low-cost workforce in STEM-related industries
  • Attractive real estate costs combined with excellent utility infrastructure that can meet the most demanding manufacturer
  • GPEC, ACA and other city departments work cohesively to expedite the permittingprocess
     

Absorbtion Trends

 

Supply Trends

 

Taxes

Arizona data center sales tax exemptions

Sales tax exemptions for sales and use taxes are provided for data center equipment for owners, operators and colocation tenants of computer data centers who are certified by the Arizona Commerce Authority (ACA).

Colocation Tenants

A qualified colocation tenant is an entity that enters into a contract with the owner or operator of a computer data center for an IT load of at least 500 kilowatts per month for a period of two or more years.

Due to an attractive data center tax program, consistent diverse fuel mix and vibrant data center landscape aided by low susceptibility to natural disasters, Phoenix continues to provide one of the lowest total cost of occupancy markets for data center operations.

New Data Centers

To qualify for tax relief as a new data center, it requires, within five years of certification, that an owner or operator make a minimum investment of:

  • $250 million during the period between September 1, 2017 and August 31, 2013
  • $50 million if located in Maricopa or Pima County and is not a Greenfield SRP
  • $25 million if located in a county other than Maricopa or Pima County and is not a Greenfield SRP
  • $200 million if it is a Greenfield SRP

What is the qualification period for the tax abatements?

Upon certification, owners, operators and qualified tenants will receive a tax exemption for 10 years for prime contracting transaction privilege tax, retail transaction tax and use tax, and power consumption taxes.

If the data center qualifies as a sustainable redevelopment project, the qualification tax benefit period increases to 20 years.

What is a Sustainable Redevelopment Project?

A sustainable redevelopment project is defined as a data center that satisfies investment requirements described above and that occupies or will occupy the structural improvement at an existing facility that either:

  • Was at least 50 percent vacant for 6 of the last 12 months before the acquisition by purchase or lease of or with respect to the facility
    • OR
  • A newly constructed data center with a minimum $200 MM investment. AND
  • Attains certification under the Energy Star or Green Globes Standard, the Leadership in Energy and Environmental Design (LEED) green building rating standard developed by the United States Green Building Council, or an equivalent green building standard that was not previously certified under these standards.

Program Benefits

A CDC Owner, Operator or Qualified Colocation Tenant may claim exemptions from transaction privilege tax and use tax in connection with qualifying purchases of CDC Equipment delivered to and installed at the CDC within the respective purchaser’s Qualification Period by providing the vendor documentation supportive of the exemption.

Requirements for Program Benefits

  • The Facility is predominantly used to house working servers and, therefore, the Facility qualifies as a CDC OR
  • The CDC does not generate electricity for resale purposes or generate, provide or sell electricity outside of the CDC AND
  • The CDC is certified by Commerce after submission by the CDC Owner or Operator of a complete and correct application for certification AND
  • Qualifying investments of at least the relevant amount and within the relevant time period are made by qualifying persons or entities at the CDC AND
  • Qualifying purchases of CDC equipment delivered to and installed at the CDC are made by the CDC Owner, Operator and/or Qualified Colocation Tenants within the respective Qualification Period following presentation to the equipment vendor of documentation supportive of the exemption.

Sample Tenant Benefits

If Tenant were to occupy/utilize 500 kW to 1,000 kW in their data center facility, they could benefit from the following state, county and local taxes:

  • Transaction privilege taxes (under the retail classification of A.R.S. § 42-5061)
  • Use taxes on qualifying purchases of CDC equipment
  • A tax exemption for 10 years for prime contracting transaction privilege tax, retail transaction tax and use tax, and power consumption taxes. If it is a Sustainable Redevelopment Project, the exeption increases to 20 years

Necessary steps Tenant would need to complete to receive such benefits:

Provide Commerce the information set forth in subsection III.C.4.b, which include:

  1. Federal tax identification number
  2. Verification that the tenant is enrolled in the Federal E-Verify Program
  3. The number of kilowatts per month authorized for use by tenant in its agreement with the Owner or Operator for occupancy at the CDC
  4. Copy of the lease or other contract between the tenant and the Owner/Operator-Applicant governing use or occupancy of all of part of the CDC by the tenant

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