Why Phoenix’s Data Center Market is Hotter than Ever

Why Phoenix’s Data Center Market is Hotter than Ever

September 10

In addition to being the fastest growing city in the country since the 2010 census, Phoenix continues to be a major economic success story in the years following the COVID-19 pandemic. The metro area’s annual gross domestic product in 2022 showed a 7.7% increase over 2019, which was more than twice the national average of 2.9%. A good portion of that growth has been driven by the technology sector, with tech industry jobs making up 7% of the city’s workforce in 2021. This combination of rapid population growth and economic expansion has greatly increased the demand for data center capacity. 

Understanding the Phoenix Data Center Market

A November 2022 report ranked Phoenix fifth on a list of the country’s top 20 data center markets based on sales volume. Between 2012 and 2021, there were just over $480 million in data center transactions closed, including the 12th and 14th biggest sales of the past decade (made by Landmark Dividend and Apple, respectively). Since 2012, 876,000 square feet of data center space has been added in the metro area.

While it was long considered a Tier 2 data center market focusing on backup and disaster recovery, Phoenix has emerged as a burgeoning Tier 1 market largely due to growing demand for cloud services in the Southwestern US. The Greater Phoenix area ranked third in the country for leasing activity in the first half of 2022, with 44.3 MW of net absorption during the same period. 

5 Reasons Why the Phoenix Data Center Market Is Heating Up

1. Competitive Energy Costs

Phoenix enjoys a diverse fuel mix and competitive power environment, both of which contribute to lower energy costs than comparative markets. Fuel diversity ensures a reliable supply chain and insulates against fluctuations in any single energy source, enhancing the stability of energy provision. Arizona’s multiple power providers create a competitive market landscape that not only keeps rates competitive, but also promotes innovation in energy delivery and service quality, both of which dramatically reduce the data center power costs.

The state’s firm commitment to solar energy, which helps it rank 5th among all states for renewable energy, also aligns with the sustainability goals of forward-thinking enterprises looking for an opportunity to reduce their carbon footprint. This combination of cost-efficiency, reliability, and commitment to sustainability, makes Phoenix an attractive location for data center operations.

2. Strategic Location

Phoenix's strategic location offers a unique advantage in the world of data centers, providing them with exceptional connectivity to major West Coast tech hubs and the rapidly expanding markets of the Southwest. This advantageous location is more than just a matter of convenience—it's a cornerstone of efficient and high-performing digital infrastructure. Due to the state's proximity to these tech-centric regions, data centers located in Phoenix can deliver superior connectivity with minimal latency, a critical factor in maintaining the speed and reliability of data transfer. This low-latency connection to key markets is instrumental in supporting real-time applications, cloud services, and other data-intensive operations, making Phoenix an attractive choice for businesses seeking to optimize their digital infrastructure

3. Business-Friendly Environment

Arizona's reputation as a business-friendly environment significantly enhances its appeal as a location for data centers. This reputation is built upon a foundation of policies and initiatives designed to foster growth and innovation, including competitive tax structures that provide financial advantages to businesses. The state's tax policies (including a data center tax break that was recently extended until 2031) are complemented by a range of incentives specifically targeted at tech companies, making it an even more attractive proposition for data centers and their clients. These initiatives not only reduce the cost of doing business in Phoenix, but also actively encourage investment in technological advancement and infrastructure development. 

This favorable business environment extends beyond financial considerations, fostering a culture of innovation and growth that is essential for the success of data centers. In an industry where technological progress is paramount, this supportive environment can be a critical factor in maintaining a competitive edge. Additionally, Phoenix's commitment to collaboration between businesses, educational institutions, and government agencies creates a cohesive ecosystem that promotes shared success.

4. Tech-Ready Talent

When considering Phoenix as a potential location for data centers, an often-overlooked asset is the city's growing talent pool, particularly in the field of information technology. Recently listed as one of the country’s top cities for tech talent, Phoenix is quickly emerging as an attractive destination for both employers and tech workers. This workforce represents a critical resource for the operation and maintenance of data centers, which require a broad range of specialized skills to ensure optimal performance. From network engineers and systems administrators to cybersecurity experts and data scientists, the rich diversity of IT professionals in Phoenix facilitates the delivery of comprehensive, high-quality services at data centers. 

Furthermore, the presence of renowned educational institutions like Arizona State University continually feeds this talent pipeline, guaranteeing a sustainable source of skilled professionals well into the future. The city’s commitment to fostering tech education and training initiatives further supports this growing talent pool. Choosing Phoenix as a data center location not only provides immediate access to a wealth of IT expertise but also ensures a resilient and adaptable workforce ready to meet the evolving challenges of the region’s data center industry.

5. Low Disaster Risks

Phoenix is distinguished by having a low risk for natural disasters. This has made it a strategic bastion for data center development, offering unparalleled resilience and security to businesses. In the world of IT and data storage, risk mitigation is paramount, particularly when it comes to the threat posed by natural disasters such as earthquakes, floods, hurricanes, or tornadoes. These events can trigger catastrophic data loss and interrupt critical services, wreaking havoc on businesses and their customers. 

Nestled in the heart of Arizona, Phoenix stands apart from many other regions due to its notably low incidence of such calamities. The region experiences substantial seismic activity and is generally safe from floods due to minimal rainfall. Despite its recent close brush with Hurricane Hilary, Arizona is generally quite safe from hurricanes, especially compared to data centers near the Gulf of Mexico and the Atlantic seaboard. This low-risk profile translates into enhanced reliability and resilient digital infrastructure that can support continuous uptime. Selecting Phoenix as a data center location is a strategic investment in operational security and business continuity.

Meet Evoque Phoenix

Situated in nearby Mesa, AZ just 10 miles from Phoenix Sky Harbor Airport, Evoque's PHX1 data center is a cloud-enabled colocation facility that boasts over 154,000 square feet of space. This resilient infrastructure is equipped with robust power and cooling systems to guarantee 100% uptime reliability. High-security access control and perimeter fencing further enhance the safety and security of the facility. Additionally, the data center offers seamless access to public clouds, high-speed connectivity to other Evoque data centers across the US, and provides low-latency, multi-carrier internet connectivity to ensure optimal performance.

Phoenix Data Center Features

  • 154,158 sq. ft. data center
  • Utility Power (MW): 14 MW
  • UPS Power (MW): 6.7 MW
  • Higher densities cage and cabinet options
  • Cloud-enabled service providers
  • 100% SLA on power, network and bandwidth
  • N+1 and 2N UPS redundancy
  • 24x7 onsite staffing
  • Six layers of security, including mantrap
  • Access control with card, bio-scanner, or mobile device NFC authentication
  • PCI-DSS, SOC 1 Type II, SOC 2 Type II, SOC 3, and ISAE 3402

Learn more about Evoque Phoenix.

How Evoque’s Phoenix Data Center Can Benefit Your Business

At Evoque, we are committed to making every deployment process as seamless as possible. We provide comprehensive migration support, helping you optimize data floor layouts, cabinet configurations, power distribution, and network infrastructure to align perfectly with your unique business needs.

To schedule a tour of our Phoenix data center, talk to one of our colocation experts today.


Stay Connected