Center of Debate

Article originally posted on Phoenix Business Journal on February 16, 2026

Everywhere you look in the Valley, conversations about data centers abound.

In the East Valley, the city of Chandler sent shock waves through the metro in December when its City Council voted unanimously to reject a $2.5 billion data center proposal.

The vote occurred at the end of a contentious meeting where dozens of citizens expressed their opposition to the proposal – an example of the pushback that has occurred in recent years as the Valley has experienced a rush of data center development. And earlier this month, residents of the town of Marana – about 26 miles northwest of Tucson – submitted 2,800 signatures in an attempt to get a proposed data center project on a public ballot.

CoStar Group is tracking more than 75 existing data centers in the metro, along with more than 60 others in the construction or planning stages, according to Connor Devereaux, director of market analytics for CoStar Group/Homes.com. Though Devereaux acknowledges there are likely others that aren’t yet on CoStar’s radar, those figures offer evidence that data center developments aren’t going anywhere in the years to come.

As data center projects have grown more prolific in number, municipalities across the metro have begun to reconsider their approach to regulating the size, scope and location of these projects.

Of course, no one denies the continued need for these projects – the dawn of artificial intelligence has only amplified the demand for data centers.

That intense demand has created a spike in value for vacant land that is already zoned for their use. For instance, Vantage Data Centers bought a 70-acre Glendale site for more than $58 million in late December. The site is part of a rising 1.7 million-square-foot data center hub which is located across the street from where Blackstone-owned data center giant QTS bought 400 acres in 2022 for $255 million.

Elsewhere, other high-power uses are being converted to data centers. For instance, Buckeye’s Planning and Zoning Commission on Feb. 10 recommended approval of a plan to convert a West Valley site once pegged for a Nikola hydrogen hub into a data center campus. What’s more, some bitcoin companies have announced plans to convert mining facilities into AI data centers to help swiftly meet the demand.

Sites with electric capacity certainty in demand

Sites with certainty regarding electric capacity are even more valuable, said Jay Kramer, a shareholder at Fennemore who specializes in real estate and finance.

“In Arizona, where power availability can vary widely by location and timing, land with confirmed access to sufficient electrical infrastructure can trade at significant multiples of traditional industrial pricing — often hundreds of thousands of dollars more per acre,” Kramer said in an email. “Certainty around power delivery reduces development risk, accelerates project timelines, and directly enhances property value, while sites without clear capacity face execution risk, capital risk, and diminished demand.”

Finding a site for data center development “is really a function of power availability and enough vacant land,” said Nick Wood, a real estate and zoning attorney with Snell & Wilmer.

He added that the “political will to approve” data center zoning must also be considered. The availability of water and the impact on surrounding property owners are key considerations as applications make their way through city channels.

These conversations will only ramp up as Phoenix further establishes itself as “a global tech center,” he added.

“Part and parcel of that includes providing data center storage, which is paramount for the tech industry,” Wood said.

Wood added that data center technology is “evolving fairly rapidly,” with the power and water necessary to run these facilities continuing to decrease. Miniaturization is also a factor, as developers squeeze more information into smaller spaces.

Wood described data center development talks in the Valley as “site-specific,” adding that “in some cases it’s an easier discussion than others.”

But as more cities consider changes to their policies, he sees plenty of wiggle room for developers.

“I’m really not critical of the policies [cities have] adopted, only because we can work within them,” Wood said.

With all of this in mind, Phoenix Business Journal reached out to a handful of West Valley cities to take their temperature at it relates to data center policy. Here’s what those cities said about how their policies are evolving – and how they aren’t.

Avondale

The city of Avondale currently has three data center projects in various stages of development.

The Prime Data Centers project will encompass 1.3 million square feet; STACK Infrastructure has started construction on a 600,000-square-foot project set to be completed in 2027; and QTS Data Centers has planned an eight-building campus totaling 3.2 million square feet.

Avondale has received “significant interest from data center developers seeking sites,” said Economic Development Director Jennifer Stein, who added that the city has taken a proactive approach to their development by “prioritizing the responsible use of natural resources.”

“Avondale was among the first communities in the region to restrict water-cooled data centers, choosing instead to consider only closed-loop, air-cooled facilities,” Stein added.

The first phase of the rising Prime Data Centers development in Avondale will feature a 260,000-square-foot, closed-loop cooling facility that uses “approximately 97% less water than an equivalently sized residential neighborhood,” Stein noted.

Meanwhile, the city is working with utilities to ensure there is enough power capacity to support these data centers without impacting residents and existing businesses.

In response to concerns to about the appearance of data centers in Avondale, the city has worked with developers to curate “an office-style design and incorporate substantial landscape buffers where they are adjacent to other development,” Stein said.

“Over time, residents have come to better understand the role these facilities play in strengthening Avondale’s tax base,” she said. “Revenue generated by data centers helps fund community amenities – such as the new Avondale Aquatic Center – without increasing taxes on residents.”

Buckeye

Buckeye’s approach to data center development has recently “evolved from traditional land-use planning to a more strategic, infrastructure-driven model,” according to Buckeye Economic Development Director Suzie Boyles.

That means city leaders are looking beyond revenue generation, seeking projects that can be “catalysts for long-term infrastructure development, sustainability and regional growth,” Boyles said.

A key focus has been on reducing water demand across Buckeye’s project pipeline.

For example, the city is building the Buckeye Technology Corridor at the 2,106-acre site where the Cipriani master-planned community was once expected to rise. The idea is to prioritize development that has sustainability front of mind, including through renewable energy and modern cooling systems.

“Buckeye’s policy emphasis on reduced water consumption, sustainability, infrastructure benefits and appropriate siting (not next to residential) reflects responsiveness to community expectations and concerns about growth impacts, resource use and quality of life,” Boyles said.

Beyond the Buckeye Technology Corridor, the city also has the Buckeye 300 master-planned development in the pipeline. The project is located within a 2,400-acre megasite, and a data center is set to rise as part of the first phase.

Goodyear

Goodyear is currently in the process of undergoing a comprehensive rewrite of its zoning ordinance – a process that will include adding “data centers as a use and definition as well as determining where they will be permitted to locate,” according to Tammy Vo, director of digital communications for the city of Goodyear.

The expectation is that the zoning rewrite will be presented to Goodyear City Council this spring, she added.

“As the data center landscape continues to evolve, the city of Goodyear remains committed to ensuring that all developments, including data centers, are supported responsibly while protecting the quality of life that our residents expect,” Vo said.

One concern from Goodyear residents has been that data centers “don’t provide direct benefits for residents.”

“However, data centers play a crucial role in the community by providing jobs, improving infrastructure, and contributing significant tax revenue to the city’s General Fund, which supports essential services like police and fire protection, parks, and more,” Vo said.

Goodyear has six data center campuses: Compass Datacenters, DCX, two Microsoft campuses, Stream Data Centers and Vantage Data Centers.

Another Vantage Data Centers project is under construction.

Surprise

While Surprise typically hasn’t had much data center activity, a new project called Project Baccara has recently been proposed outside the municipality – drawing the attention of data center opponents.

“The city is not aware of any data centers in the pipeline within our city limits; however, a data center named Project Baccara is proposed near the city in unincorporated Maricopa County,” Surprise Economic Development Director Jeanine Jerkovic told the Business Journal. “We have had residents voice their opposition to this project during Call to the Public at a few of our City Council meetings.”

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