Based on the U.S. Data Center Trends Report from a company called CBRE, the city of Phoenix in 2018 became the second largest market for data center leasing in the country. In doing so, it surpassed such leading markets as the Silicon Valley and Dallas.
According to the report, the city recorded more than 41 megawatts of what is known as net absorption. This represents an increase of close to 600% over the year before. The report also indicated that Phoenix had the third highest amount of megawatts for completed new space in the United States, with 46. This number trails only Northern Virginia and Dallas.
In spite of all these increases, the wholesale vacancy rate in the city was under 8%, which is close to a two-year low. Phoenix also has more than 71 megawatts currently under construction, trailing only Northern Virginia. It is immediately ahead of the following areas:
- Dallas
- Houston
- Atlanta
The city of Phoenix also has another 240 megawatts planned for the near future.
Mark Krison, who is a senior vice president at CBRE, says that data storage demand is increasing because of a number of factors. This included AI applications and the upcoming roll out of 5G cellular access across the nation. He adds that, because of this, Phoenix has become an attractive location for data centers. The reasons he cites includes:
- The number of quality power sources available in the region
- Strong government tax incentive programs
- A good climate and geography
In 2018, the top 7 data center locations supplied more than 300 megawatts of power absorption. This is an increase of more than 15% from the previous year, which itself was a record year. Currently, northern Virginia is largest U.S. market for data centers, and it accounted for nearly 60% of the power absorption in the top 7 markets.
Pat Lynch, who is the senior managing director of Data Center Solutions at CBRE, says that his company has been carefully monitoring data center trends this year in terms of supply and demand. He adds that data consumption is what is driving industry growth. This includes the following technologies:
- Big data
- 5G
- Video Games
- Streaming
- Edge computing
- The Internet of things (IoT)
Lynch further says that his company has seen considerable construction growth this year due to the fact that data center operators are to trying put themselves in a position in which they can quickly provision new facilities.