Phoenix is one of the hottest cities in the United States, not just temperature-wise, but also in terms of data center growth. The city that averages 106 degrees Fahrenheit in July is also home to some of the largest data centers in the country, and the pace of construction in the Phoenix metro area continues to increase. In 2021, Phoenix was home to 86MW of data center construction, behind only Northern California, Northern Virginia, and the Northwest—making it a Tier 1, top five market.
The reasoning behind Phoenix as a desirable option for data centers may not be readily apparent if one only looks at the area’s climate. All those servers, racks, and other equipment need to be housed in cool temperatures—ideally under 80 degrees Fahrenheit.
But while the Phoenix area presents some challenges from its climate, it more than makes up for it in other areas. Phoenix is the fastest-growing city in the United States, which has led to it being listed as one of the nation’s top areas for technology talent. The cost of energy in Arizona is relatively low, yet the state offers attractive tax incentives. Meanwhile, Phoenix and nearby suburbs, including Goodyear, Mesa, and Chandler, feature numerous connectivity options and widely available land.
Let’s take a closer look at these and other factors that are making the Phoenix area a great alternative to Silicon Valley and some of the other well-established locations in the Western U.S.
Wide Open Spaces and Plenty of Incentives
The state of Arizona offers significant tax benefits to attract data center operators and end-users. For example, the Arizona Commerce Authority’s Computer Data Center Program outlines a number of tax exemptions good for ten calendar years (20 years for data centers that qualify as Sustainable Redevelopment Projects). The state reinforced its tax incentive program for data centers in 2021 with new legislation that extends tax breaks through 2033.
This favorable business climate has attracted some of the largest companies in the world, making Phoenix and its surrounding environs budding technology hubs. Google, Microsoft, Amazon, and others have either developed or are planning on developing their own hyperscale data centers based in the state.
Most of the growth that’s taking place is happening in Goodyear, Mesa, and Chandler. The cities are no more than 22.5 miles from Phoenix, with Goodyear just west of Phoenix and Mesa and Chandler to the east.
Yet despite being near a city of more than 1.5 million people, each of these cities offers large amounts of available land. For example, the City of Mesa’s Office of Economic Development touts “more than 1,000 acres of shovel-ready sites—perfectly suited for a data center operation.”
