Data Center Frontier special report: Phoenix data center market

Introduction

This report was prepared by Data Center Frontier, in conjunction with datacenter Hawk.

About data center frontier

www.datacenterfrontier.com

Data Center Frontier charts the future of datacenters and cloud computing. We write about what's NeXT for the Internet, and the innovations that will take us there. The data center is our prism. We tell the story of the digital economy through the facilities that power the cloud and the people who build them. In writing about data centers and thought leaders, we explain the importance of how and where these facilities are built, how they are powered, and their impact on the Internet and the communities round them.

Data Center Frontier is edited by Rich Miller, the data center industry's most experienced journalist. For more than 15 years, Rich has profiled the key role played by data centers in the Internet revolution.

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Market Overview & Analysis

Phoenix is an ascendant data center market, and is rapidly emerging as a destination for the largest players in hyperscale computing. It is currently experiencing a data center building boom, with hundreds of megawatts of potential capacity in the pipeline. The Phoenix region benefits from power and fiber infrastructure, and growing competition among service providers.

Phoenix has become one of the most dynamic datacenter growth markets in the U.S., with a surge in leading in the past two years, including major deals featuring hyperscale cloud companies. Users have long sought space in Phoenix as an alternative to California locations with higher cost and disaster risk. It's now clear that Phoenix is becoming a datacenter destination in its own right, attracting a larger concentration of both customers and service providers in the process.

The Phoenix market is home to 1.61 million square feet (SF) of commissioned data center space, representing 211 megawatts (MW) of commissioned power, according to market research from datacenterHawk. That makes Phoenix the sixth largest market for data center capacity in the U.S., trailing Northern Virginia, Silicon Valley, Dallas, Chicago and New Jersey.

Growth trends suggest that in Phoenix will join the Top 5 markets in 2018, with total capacity that exceeds that of New Jersey. There was a solid 24 megawatts (MWs) of capacity absorbed in 2017, and 2018 is shaping up as another strong year, with 9.8 MWs of absorption in 2Q 2018 alone.

The most remarkable aspect of the Phoenix market is the industry optimism about future demand. Data center developers have 707 MWs of capacity on the planning board, more than any market except Northern Virginia. The surging demand in Phoenix has also attracted new players, and prompted expansions by existing providers. Iron Mountain, EdgeCore, CyrusOne, QTS Data Centers, DigitalRealty, EdgeConneX and Aligned Data Centers have all announced new campuses or expansions of existing properties.

At present, data center supply and demand appear to be well matched, as reflected in the vacancy rate of 9.4 percent in the region. This will be a number to watch as new capacity is deployed. A key factor will be whether service providers are able to successfully pre-lease space, or seek to build new projects on speculation in order to have inventory available for large deals.

This Data Center Frontier Special Report, brought to you by Iron Mountain, was prepared by Data Center Frontier in conjunction with DataCenterHawk. The report gives an overview and analysis of the Phoenix data center market, an overview of notable development projects, a list of the major providers, as well as trends in supply and demand.

The Phoenix data center market is currently experiencing a data center building boom. Data center users and operators have been extremely active in Phoenix recently, spurring an increase in supply to meet the demand from users both in and out of the market. Arizona's politicians have also increased the appeal of the market to data center users by offering 10-year tax breaks on both data center equipment and labor services.

Download the full report today to learn more about the Phoenix data center market.