Greater Phoenix is the fifth-largest data center market in the U.S.

Data Centers

Establish Mission-Critical Operations in Greater Phoenix

Greater Phoenix is the fifth-largest data center market in the U.S. With over 300 megawatts of existing inventory and an additional 250 megawatts of inventory planned for the near future, the market’s growth shows no signs of slowing down. Greater Phoenix continues to prove to be one of the top cities for data centers. As a result of its stable climate, Greater Phoenix offers the potential to reduce the amount of energy necessary to operate mission-critical operations. This, coupled with a low risk of natural disasters, make the region a prime location for mission-critical operations.

Data Centers Industry Report

Get our 21-page, in-depth report on the data center ecosystem in Greater Phoenix.

Reliable Infrastructure

Greater Phoenix has one of the most dependable electric grids in the nation with a low risk of natural disasters and a large network of fiber.

Advantageous Weather

The mild weather and low chance for natural disasters positions Greater Phoenix as a top choice for data centers.

Competitive Operating Costs

Operating costs for data centers in Phoenix are up to 41% lower than competing markets with competitive pricing on electricity. Arizona is a right-to-work state and offers substantially lower corporate income tax rates.

Economic Development Programs

Greater Phoenix offers sales tax and use tax exemptions for up to 20 years for data centers as well as $9,000 of corporate income tax credits per job. Additional depreciation also greatly reduces property tax liability.

Large Existing Cluster

Greater Phoenix is the fifth-largest market by inventory in megawatts, growing 61.6% since 2015. Colocations in the market include industry leaders such as Digital Realty Trust, CyrusOne, and Iron Mountain while enterprise users include Apple, GoDaddy and Microsoft.

Quality of Life

With the significantly lower cost of living across all major expenditures, Greater Phoenix offers shorter commute times for more free time and more than 300 days of sunshine annually.

Reliable Infrastructure

Greater Phoenix offers a reliable power grid for data center operations
Reliable Power

With the second-most reliable power grid in the nation and highly rated electric utility providers, Arizona offers consistent power to data centers in the state. Greater Phoenix’s data center colocation industry has more than 300 megawatts of existing inventory and an additional 250 megawatts of inventory planned for the near future, a proactive approach to support continued growth in the market.

Greater Phoenix has Environmental Resiliency
Environmental Resiliency

Over the last 10-year period, Arizona recorded only 33 total hours of natural disaster disturbances, a fraction of the downtime experienced by southwest neighbors California and Texas. Arizona also leads the nation in water management and conservation efforts, and because of the 1980 Groundwater Management Act, the state has the infrastructure to maintain a reliable, resilient water supply for existing and new data centers in the region.

Airline connectivity in Greater Phoenix offers quick transportation options for Data Center operations in the region
Airline Connectivity & Access

Enjoy prime connectivity in Greater Phoenix with close proximity to southwest markets, the cross-border supply chain in Mexico, and air travel and commerce efficiency through multiple airports. Phoenix Sky Harbor International Airport alone offers over 1,200 daily domestic and international flights.

Download the full data centers industry analysis for more on Greater Phoenix infrastructure.

Data Centers Report


Greater Phoenix is the fifth-largest data center market in the nation

Source: CBRE


From 2015 to 2020, employment grew 13.0% in the Phoenix-Mesa-Scottsdale region, compared to the national growth rate of 3.1%

Source: Lightcast 2021 Q1


Greater Phoenix power customers experience less than an hour of outage time per year, among lowest in the country

Source: Energy Information Administration

Advantageous Weather

Low catastrophic risks make Greater Phoenix the perfect location for Data Center operations
Low Catastrophe Risk

Should a facility operate with direct evaporative cooling strategies, the data center can potentially operate up to 70% of the year without the use of chillers. With low catastrophic risk, Greater Phoenix is an ideal climate for mission-critical operations.

Source: SmithGroup

Mild weather offers a stable environment for Data center operations in Greater Phoenix
Benefits of Mild Weather

With cabinet arrangements using enclosed hot aisles, the region’s climate offers:

  • Reduced chiller operations up to 40% of the year
  • Free air side cooling up to 38% of the year
  • Water side free cooling (or no chiller operation) up to 41% of the year

Source: SmithGroup

Due to the mild weather the majority of the year, Greater Phoenix creates the availability for economizer, or “free cooling” strategies, eliminating the need for expensive mechanical refrigeration.

Download the full industry analysis for more on data centers.

Data Centers Report

Competitive Operating Costs

With 300 days of sunshine a year and an average temperature of 75 degrees, Greater Phoenix has the perfect climate for Data Centers.

Greater Phoenix boasts low operating costs compared to competitor markets and impressive tax incentives, making it the perfect location for data centers. Arizona has a very competitive tax rate and a mandated benefits environment compared to peer markets. Even with the highly competitive tax environment, there are several tax incentives that can be utilized to mitigate operating costs. Greater Phoenix is competitive when it comes to the cost of utilities compared to competitor markets as well.

Annual Operating Cost by Metro

The Annual Business Operating Cost Pro-forma below estimates the cost of running a typical data center business in competitor markets across a handful of major expense categories. Component and custom analyses to match your company’s operations can be provided upon request. Contact us to request a custom analysis for your business.

Data Center – Enterprise




Real Estate

Property Tax

Total Operating Cost


Greater Phoenix
















DallasFort Worth








San Jose








Washington DC-Arlington








*The projected property tax of $4,758,884 in Greater Phoenix is set to decrease with the passage of HB2822.

Source: Applied Economics MetrocompTool, December 2020

Assumptions: $150,000,000 personal property investment; 300,000 square foot High Tech, Construction; 150 acres; Utilities (per month): Electricity: 20,000KW, 6,000,000KWh; Water/Wastewater: 500,000cf, 4 meter; 50 jobs (Bureau of Labor Statistics equivalent occupations)

HB2822: Tax Reduction to Benefit Data Centers

HB2822 reduces businesses’ tax burden by setting the full cash value of business and agricultural property at a fixed 2.5% of the property’s acquisition cost, rather than a depreciation schedule. This lowers the assessed value of the property and greatly reduces tax payments. Over a 10-year period, the personal property tax on a $500 million property would be just $2.4 million, a fraction of the nearly $51-million tax on standard depreciation. Below is a table comparing deprecation value of the property before and after the passage of the bill. Get more information here.

Schedule Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 Year 8 Year 9 Year 10

Previous (Pre-2022)











Current (Since 2022)











Economic Development Programs

Phoenix offers a competitive tax environment for data center companies looking to relocate
Competitive Tax Environment

Arizona offers a highly competitive tax environment and incentive programs that can be utilized to mitigate operating costs. The state sales tax rate is only 8.6%, corporate income is taxed at 4.9% and unemployment insurance is only 2.0%.

Taxes & Incentives

Arizona’s business-friendly operating environment provides opportunities for companies to mitigate costs through low tax rates and available incentives. Incentive programs include a Quality Jobs Tax Credit, Qualified Facilities Refundable Tax Credit and Renewable Energy Tax Investment Credit. Applicable incentives will depend on actual project parameters and varying program qualifications and requirements as determined by the Arizona Commerce Authority.

Download the full data centers analysis for more on taxes and incentives.

Data Centers Report

Large Existing Cluster

Massive data centers that operate on a national and international level take advantage of the reliable power grid of Greater Phoenix. Both colocation and enterprise data centers call the region home.

Colocation Spaces

Thirty-eight colocation facilities make up Arizona’s operation core. Below are some major colocation players that operate in the region.

Enterprise Data Centers

In addition to the colocations, Greater Phoenix is home to some of the most prominent enterprise data centers in the world.



Data center providers in Arizona


Data centers


Cloud nodes


Disaster recovery and business continuity sites


Quality of Life

Experience a vibrant lifestyle and diverse culture at an affordable cost of living in Greater Phoenix

Experience a vibrant lifestyle and diverse culture at an affordable cost of living.

Enjoy the outdoors with more than 300 days of sunshine, average temperatures of 75 degrees, convenient access to over 400 hiking trails and globally recognized sporting events. Take part in a vibrant arts and culture scene that includes prominent classical arts to public art to craft markets and a diverse range of music and cultural events. And, eat well with fresh farmers markets in every city, and globally recognized chefs and culinary experiences at your doorstep.

Calculate your savings

Select your annual income, monthly mortgage, healthcare and grocery costs to find how much you would save with a move to Greater Phoenix.

Los Angeles
San Francisco
Annual Income
Monthly Mortgage
Monthly Healthcare
Monthly Groceries
Total Annual Savings

Source: ACCRA, Cost of Living Index 2022 Q1