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Phoenix Data Centers: 5 Reasons to Colocate in PHX
Over the last ten years, digital transformation has led to an explosion in the growth of data center colocation. In 2021, the colocation industry was valued at $50.4 billion and is projected to reach a valuation of $130.8 billion by 2030. The Phoenix data center market is enjoying especially explosive growth.
Phoenix, Arizona, may be the perfect city for you if you are in the market for retail colocation services. With over 90 data centers and 30 multi-tenant data center providers existing, Phoenix, combined with surrounding areas like Chandler, Mesa, Goodyear, and Glendale, ranks among the top ten global data center markets in the United States. The city presents a lot of advantages for companies looking for a favorable colocation environment. If you are exploring other tier-1 data locations like Dallas, Los Angeles, or Silicon Valley, you should also consider Phoenix.
This article delves into the top five reasons to consider the Phoenix data center market for your next colocation facility.
Let’s get started.
Phoenix Has Reliable Internet Infrastructure and Network Connectivity
Phoenix boasts three major carrier hotels (Digital Realty’s site at 120 East Van Buren Street, phoenixNAP’s site at 3402 East University Drive, and Iron Mountain’s location at 615 North 48th Street). The city is also part of the southern fiber route. This stretches from California through Texas, Atlanta, DC, and New York. Ubiquitous fiber connectivity options mean you can get low-latency links to major markets from Phoenix.
The city’s robust fiber network provides high-speed connectivity from downtown Phoenix to the suburbs. With over 150,000 miles of fiber optic capacity, the Phoenix offers reliable internet connectivity with diverse network paths. This also provides low-latency links to western colocation hubs like Silicon Valley, Las Vegas, Dallas, Denver, Los Angeles, Salt Lake City, and San Diego.
The Arizona Commerce Authority announced a strategic broadband plan to increase reliable internet connection within the state in February 2022. This plan aims to create a state-wide fiber network along I-17 and I-19 with a future expansion plan along interstate and highways, particularly Phoenix, Flagstaff, and Nogales.
Public cloud providers are increasingly calling Phoenix home. Microsoft Azure, Google Cloud, and Oracle, have availability zones on Phoenix. This allows customers colocating in Phoenix to connect to their preferred cloud with the lowest possible latency.
Phoenix also has a wealth of fiber providers, MPLS, and broadband providers in the market. These include Intermountain Infrastructure Group (IIG), Alluvion Communications, Colt Technology Services, Arelion, AT&T, Cox Communications, Zayo, Crown Castle, Fatbeam, Hudson Fiber, InnerCity FiberNet (ICFN), and Cogent Communications.
Phoenix Enjoys Affordable and Reliable Power Supply
Power supply significantly contributes to retail colocation costs. The lower power costs available in Phoenix help customers drive down the cost of colocation services.
Average power costs in Phoenix are around 14 ¢/kWh, which is 3% lower than other parts of Arizona and 34% lower than the national average. While power costs are higher than markets like Dallas, Phoenix makes up for this with the abundance of alternative energy. For example, Arizona ranks as the fifth leading state in generating solar energy within the US.
Data centers in Arizona are less likely to suffer from power interruption. This is because the state has many green energy options that companies can harness as alternatives. Two major solar plants, Agua Caliente and Solana Generating Station produce over 600 megawatts of electricity combined. A combination of smaller utility- and small-scale solar installations produce over 4500 megawatts of solar-generated electricity.
Power companies also rely on natural gas, biomass, and geothermal resources to build a reliable power system, allowing data centers to support their sustainability goals. The city has over 600 megawatts of multi-tenant commissioned power supply available to colocation facilities.
Additionally, Arizona public service offers an extra high load factor rate of over 90% to colocation facilities that consume at least 5 megawatts of energy. This helps make the Phoenix power market competitive and affordable.
Phoenix Offers Attractive Economic Development Laws for Businesses
Arizona provides a lot of favorable economic conditions that provide stability for the Phoenix data center market. Here, we’ll explore all three.
Similar to data center hubs like Texas, Arizona provides a 10-year tax exemption on equipment acquisition and labor services for data centers within the state. The waiver also extends for 20 years when the business qualifies for a sustainable redevelopment project.
Additionally, if data centers contract with qualified state operators for a minimum of 500 kilowatts of power for two years or longer, they can qualify for tax reductions. These tax breaks allow Arizona data centers to provide competitive prices to customers interested in retail colocation.
Reduced Real Estate Costs
The real estate market in Arizona provides a lot of advantages when it comes to property costs. The desert and flat geography mean that there is plentiful land to be developed within an affordable price range. This affordability makes Phoenix an attractive location for colocation facilities.
Compared to other competitive data center markets in the US, Phoenix has one of the lowest cost-per-acre price ranges after Dallas. Arizona also provides a depreciation policy that provides over 70% reduction in property tax in the first year. All these are contained in the Arizona competitiveness package signed in 2011.
These reductions in property costs allow colocation facilities to provide favorable lease contracts to customers interested in retail colocation.
Low Lease Rates for Retail Colocation
Compared to west coast markets like Los Angeles and Silicon Valley, Arizona provides a lower total cost of ownership (TCO) to corporations interested in doing business in the state. As a result, Data centers in Arizona can offer lower lease rates for retail colocation facilities compared to other tier-1 data center markets in the country.
Phoenix Enjoys Favorable Weather Conditions
Phoenix has a minimal record of damage as a result of severe natural disasters. Due to its geographic location, it is rated a low-risk area concerning floods, hurricanes, and seismic events. Beyond occasional heatwaves, Phoenix ranks very low regarding extreme weather conditions affecting other data center markets in the US.
As a result, Phoenix has always been considered a great disaster recovery site and is now emerging as a primary market for the development of colocation facilities. These stable weather conditions lower upfront construction costs and keep attracting industry investors.
Phoenix Has a Thriving Tech-Enabled Environment
Phoenix is home to a thriving ecosystem of tech companies. Home to several corporate and regional headquarters, the city has experienced a rise in the influx of tech companies and skilled labor that settle yearly. Avnet, one of the largest technology distributors globally, is headquartered in Phoenix. Other Fortune 500 companies based in Phoenix include Freeport-McMoRan, Republic Services, Magellan Health, and Sprouts Farmers Market.
How Brightlio Can Help Your Business With a Phoenix Colocation Facility
If you are in the market for colocation services in Phoenix or other markets, Brightlio can help.
With our extensive network of global data center partners, Brightlio is committed to helping you select the right colocation partner for your data center needs and budget. Our team provides competitive colocation pricing for data centers in Arizona and other markets. As a telecommunication broker, there is no cost to you for our services.
We are committed to being your most trusted and most responsive technology solutions partner. Contact Brightlio today!
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