Data Centers in Arizona

Arizona – Premier Hub for Resilient, Low-Latency Infrastructure

Arizona is a top-tier market for businesses requiring highly resilient infrastructure with excellent connectivity to the Western United States and Mexico. Its combination of robust data center inventory, competitive tax incentives, and a favorable disaster risk profile makes it a strategic choice for production workloads and disaster recovery, ensuring maximum uptime and performance.

Arizona: At A Glance

Network & Connectivity Ecosystem

Arizona, particularly the Phoenix metropolitan area, has become a primary interconnection point for the Southwestern United States.

Carrier Density & Carrier Neutrality: The state features a dense and competitive connectivity market, with access to over 49 network providers as of September 2025. Major carrier-neutral facilities in Phoenix, Chandler, and Mesa provide a wide array of choices for local, national, and international transit.

Direct Cloud On-Ramps: With over 8 cloud on-ramps and access to 13 distinct cloud regions as of September 2025, Arizona offers excellent hybrid cloud capabilities. Direct, low-latency connections are available to major platforms including:

• AWS
• Microsoft Azure
• Oracle Cloud

Internet Exchange Points (IXPs): The presence of IXPs like DE-CIX Phoenix facilitates efficient, low-cost traffic exchange between networks. This direct peering improves performance and reduces reliance on long-haul transit routes.

Bare Metal: Bare metal cloud solutions are readily available from multiple providers in the Phoenix area. Companies like phoenixNAP offer dedicated servers that give customers full control over their hardware for performance-intensive applications.

Power Analysis

Arizona's power infrastructure is a significant advantage for data center operators, offering both scale and reliability.

Average Cost Of Power: Industrial electricity rates typically range from $0.07 to $0.09 per kWh as of September 2025. This competitive pricing structure provides a crucial operating expense advantage for high-density computing environments.

Power Grid Reliability: The electrical grid, particularly in the data center hubs of Phoenix and Chandler, is well-engineered with significant investment in redundancy. Multiple substations and diverse power feeds are standard for mission-critical facilities, ensuring high levels of uptime. The power mix includes significant contributions from natural gas (45%) and nuclear (27%).

Market Access, Business & Tax Climate

Arizona's business environment is actively designed to attract technology investment, including data centers.

Proximity To Key Business Districts: Data centers are strategically located near major business and technology centers in Phoenix, Tempe, Scottsdale, and Chandler. This proximity serves the finance, healthcare, and semiconductor industries, enabling low-latency access for critical operations.

Regional Market Reach: From its strategic location, Arizona serves as an ideal hub for reaching markets across the Southwest, including Southern California, Nevada, Utah, New Mexico, and Northern Mexico.

Tax Advantage For Data Centers: Arizona offers one of the most attractive tax climates for data centers in the US. The Computer Data Center Program provides significant sales and use tax exemptions on equipment for both data center owners and colocation tenants, directly reducing capital and operational expenditures.

Natural Disaster Risk

Arizona presents a balanced and manageable risk profile, free from many of the natural disasters that affect other major US markets.

Based on its FEMA National Risk Index score of 91.66, Arizona has a High risk rating as of September 2025. The primary hazards to consider are:

• Drought
• Earthquake
• Heatwave
• Landslide
• Riverine Flooding
• Wildfire

Despite the high overall score driven by heat and drought, the state's location eliminates risks from hurricanes and significant coastal flooding, making it a reliable location for critical infrastructure.