Data Centers in Phoenix

Phoenix – Scalable Infrastructure and Low-Latency Cloud Access

Executive Summary

Phoenix serves as the primary alternative for enterprises leaving California to escape high costs and seismic risks. This market provides the scale and power density required for high-growth tech companies managing AI and cloud-native workloads.

Phoenix: At A Glance

Network & Connectivity Ecosystem

Carrier Density & Carrier Neutrality: The market features over 45 carriers as of September 2025, ensuring a competitive environment for blended IP and dark fiber requirements. Most facilities are carrier-neutral, allowing for flexible interconnection without vendor lock-in.

Direct Cloud On-Ramps: Phoenix hosts over 8 direct on-ramps as of September 2025, providing entry points to 13 cloud regions. This includes dedicated access to AWS, Microsoft Azure, and Oracle Cloud, facilitating high-performance hybrid cloud architectures.

Internet Exchange Points (IXPs): Primary peering occurs through the DE-CIX Phoenix exchange, which aggregates local traffic to improve performance and reduce transit costs for regional service providers as of September 2025.

Bare Metal: High-performance compute options are widely available through providers like phoenixNAP and Hivelocity, offering rapid deployment for resource-intensive applications as of September 2025.

Power Analysis

Average Cost Of Power: Industrial electricity in the region typically ranges from $0.07/kWh to $0.09/kWh as of September 2025. This cost profile provides a significant financial advantage compared to markets in the Pacific Northwest or California.

Power Grid Reliability: The local grid is well-engineered and specifically built to support the dense data center corridors in Chandler and Mesa. Multi-substation support and a commitment to nuclear and renewable baseloads ensure consistent uptime for mission-critical operations as of September 2025.

Market Access, Business & Tax Climate

Proximity To Key Business Districts: Data centers are concentrated in the Southeast Valley, specifically in Chandler, Mesa, and Gilbert. This proximity to the local semiconductor and aerospace manufacturing hub makes it an ideal location for industrial tech and financial services as of September 2025.

Regional Market Reach: Phoenix acts as the primary service hub for the Southwest United States, effectively reaching over 30 million people within a single-day network hop as of September 2025. It serves as the leading overflow market for Los Angeles and San Diego.

Tax Advantage For Data Centers: Arizona provides aggressive incentives, including the Computer Data Center Program and Transaction Privilege Tax (TPT) exemptions. These benefits provide long-term relief for both owners and colocation tenants, reducing the total cost of ownership as of September 2025.

Natural Disaster Risk

The Phoenix market carries a FEMA NRI Score of 91.6 as of September 2025, which is categorized as High. While the region is safe from hurricanes and major seismic events, the score reflects environmental pressures common to the desert.

Risk Summary as of September 2025:

• Heat Wave: The primary environmental risk, requiring resilient cooling architectures.
• Drought: Affects regional resource planning and water-intensive cooling methods.
• Wildfire: A regional concern that can impact air quality and remote infrastructure.
• Riverine Flood: Targeted risks in specific low-lying floodplains.
• Earthquake: Present but typically rated as a minor concern compared to coastal states.

These hazards are manageable through site-specific engineering and the use of closed-loop cooling systems.