JLL has released its H1 2021 Data Center Outlook and in the report, Phoenix ranks No. 3 in the U.S. for new data center construction and No. 3 in the U.S. for data center absorption.
Local competition is rising to an institutional level and demand doesn’t seem to quit. One sign of this: local data center and industrial land prices have increased as much as 20-40% in the last 6-12 months.
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Here’s what the report says about Phoenix:
Phoenix data center market overview
Supply: Existing inventory is tight and new construction is underway. 50 MW of available data center space exists or is under construction to satisfy insatiable demand. NTT in East Mesa and Vantage Data Centers in Goodyear have both broke ground and will be delivering new capacity in the first half of 2022.
Demand: Institutional investors target Phoenix data centers and development sites. Recent land sales are reducing available options and increasing price per acre. Recent demand for acquisitions of data center properties have compressed cap rates. Data center and industrial land prices have increased as much as 20-40% in the last 6-12 months.
Market trends: The price competitiveness is expected to intensify in the Phoenix market. Additional second-generation product will bifurcate the current aggressive pricing environment.
Outlook for users:
• More supply is being delivered to the market by Q1 2022
• Flexibility will be crucial to test the residual effect of growth
• Continued cloud strategy pressures from the C-Suite
Outlook for providers:
• Be able to deliver contiguous space to end users
• Pressure from end users to support operational staffing experience
• Compliance still of high importance for end users
Phoenix data center numbers
