Phoenix High in Strong Data Center Market

According to JLL’s recently released Data Center Outlook report, Phoenix ranks as a top location among all U.S. markets, performing second in the nation for year-over-year absorption in one of real estate’s strongest sectors.

The report notes that companies were migrating to the public cloud before the pandemic, but this trend accelerated in the first half of the year due to the just-in-time nature of the cloud. 

David Barnett, manager of JLL’s Americas Research, summarizes the findings of its 2020 Data Center Outlook:

• According to Nareit, data center REITs outperformed other sectors amid the pandemic in total returns, due to immediate demand for e-commerce and virtual connectivity. “While they have challenges with manned operations and increased demand, we project data center REITs will continue to outperform other sectors throughout the year,” he says. 
• Public cloud services accelerated demand in the first half of 2020. Eight of the 14 markets in the United States recorded an increase in net absorption. Last year, select major domestic markets absorbed 171.2 megawatts in H1 2019, compared to 288.2 megawatts in H1 2020.

According to the report, Phoenix ranks as a top location among all U.S. markets, performing second in the nation for year-over-year absorption, with 18.5 megawatts absorbed during the first half of the year. The amount of metro Phoenix data center projects under construction is also strong at 24 megawatts, representing a combination of speculative and build-to-suit space that ranks the market fifth in the U.S. for new build activity.

From their analysis of the Phoenix Market for JLL’s 2020 Data Center Outlook, JLL Phoenix’s managing director Mark Bauer and Kevin Bauer, both with JLL’s Data Center Solutions group, report: 

• Compass and Stream are primed to have commissioned space available for end users by October in Goodyear. Due to existing client demand, Aligned continues to build out its existing building and has started construction on the West Wing. NTT, which owns land in Mesa, is underway with its substation, showing promise to their commitment to build out space in the future. 
• Early demand by retail customers has been either put on hold or pushed out to a later date due to the pandemic. Many end users have started looking at right-sizing their existing contracts and consolidating their existing footprints. New entrants into the market include Landmark Dividend, through the purchase of an enterprise data center facility, and STACK Infrastructure, who announced in June its commitment to build out its land in Avondale.

Data centers measure their absorption by megawatts instead of square footage. One megawatt is equal to one million watts or one thousand kilowatts, and, as a general rule of thumb, each megawatt of a coal power station’s capacity can supply around 650 average homes.

Did you know: Data centers measure their absorption by megawatts instead of square footage. One megawatt is equal to one million watts or one thousand kilowatts, and, as a general rule of thumb, each megawatt of a coal power station’s capacity can supply around 650 average homes.