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Phoenix Ranks #3 for US Data Center Absorption

Year-over-year absorption nearly doubles; new construction anticipated

Amid the pandemic, Phoenix maintained its position as a top US data center market, benefiting from increased cloud migration and technology adoption across major industries. These forces drove unprecedented activity in the data center industry to end 2020, and positioned Phoenix as #3 in the US for total data center space absorbed.

According to JLL’s Data Center Year-end report, 2020 was a record year for the data center industry across the US with absorption tracking historic highs in numerous markets. Absorption reached 619.3 megawatts across 15 US markets, driven in large part by increased emphasis on consumer convenience and improved efficiencies to supply greater development.

Phoenix experienced an almost doubling of its data center absorption over the past 12 months, increasing from 26 megawatts in 2019 to 51 megawatts in 2020. That is behind only Northern Virginia, who led the nation with 323 megawatts absorbed, and Chicago, who falls just ahead of Phoenix with 59 megawatts of absorption.

Mark Bauer

“Phoenix’s data center sector is extremely healthy, with demand outpacing supply,” said JLL Managing Director Mark Bauer. “The objective for our market moving forward will be construction – creating the contiguous spaces that end users require.”

While data center construction in Phoenix dipped at the end of 2020, the Valley is on track for steady development and continued absorption that’s expected to continue through 2021 and beyond.

In order to keep up with increased demand, 611.3 megawatts of data center product is under construction in the US according to JLL, more than double what was reported in 2019. Approximately 250 additional megawatts, within almost 1 million square feet, are planned for the Valley.

Large Phoenix land purchases are already making way for a new pipeline of Phoenix construction, which Bauer says will approximately double the Valley’s data center inventory in the years ahead.

“This new product will meet demand from hyperscale cloud companies, corporate-owned enterprise data centers and colocation operators, and from rapidly expanding finance, healthcare, social media and software companies,” said Bauer.

Key Phoenix data center projects to watch include the 60,000-square-foot and 120,000-square-foot shell buildings by Compass Datacenters in Goodyear, 4.5 megawatt of commissioned space by Stream Data Centers, new substation on the QTS central Phoenix campus and new NTT substation completing in Mesa. Edgecore, CyrusOne and Aligned are also positioned to commission shell space in 2021.