Phoenix Ranks Third in the Nation for Data Center Absorption and New Construction

Article originally posted on Commercial Executive Magazine on October 11, 2021

U.S. data center demand reaches near record levels for the second consecutive year

Cloud, technology, and social media companies are driving near-record levels of data center demand around the world, signaling another strong year in 2021 according to JLL’s new Data Center Outlook. That outlook is true for metro Phoenix as well — a market that continues to position prominently among U.S. data center leaders, ranking third in the nation for both new construction and absorption according to JLL Managing Director Mark Bauer.

Global construction remained robust during the first half of 2021, with U.S. activity ramping up from 611.8 MW in the end of 2020 to 680.8 MW in the first half of 2021, just shy of the record set in the first half of 2020. In Phoenix, construction activity increased from 24 MW during the first half of 2020 to 32 MW during the first half of 2021.

 

On the absorption front, the U.S. absorbed 273.6 MW across 14 domestic markets. While this figure is below the record 294.6 MW reported in the first half of 2020 for the same markets, it is still the second highest amount on record going back to 2018. In Phoenix, data center absorption increased from 18.5 MW during the first half of 2020 to 26 MW during the first half of 2021.

Increased demand has also put upward pressure on the price of land available for new data center development, in Phoenix raising land prices by as much as 20 to 40 percent in the last six to 12 months. Although second-generation data center product could help bifurcate Phoenix’s current pricing environment, continued demand is an anticipated part of the area’s data center future.

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