Data Centers in Phoenix

Phoenix – Premier West Coast Disaster Recovery Hub

Executive Summary

Phoenix is a primary data center market for companies requiring a resilient West Coast presence without the seismic risks and higher operating costs of California. Its dense connectivity and favorable business climate make it a top-tier choice for disaster recovery and production workloads, directly supporting application uptime and operational stability. The market's aggressive tax incentives further reduce the total cost of ownership for colocation and large-scale deployments.

Phoenix: At A Glance

Network & Connectivity Ecosystem

Phoenix has matured into a vital interconnection point for the Southwestern United States, offering a compelling alternative to Los Angeles for network traffic exchange.

Carrier Density & Carrier Neutrality With approximately 50 unique network providers available as of September 2025, Phoenix offers extensive choice in carrier-neutral facilities. This density ensures competitive pricing and resilient network design options for colocation and bare metal customers.

Direct Cloud On-Ramps The market features over 8 dedicated cloud on-ramps serving 13 cloud regions as of September 2025. Direct, low-latency connectivity is available to major cloud platforms, including:

• AWS
• Microsoft Azure
• Oracle Cloud

Internet Exchange Points (IXPs) The primary public peering fabric is the Phoenix-IX. This IXP allows networks to exchange traffic directly, reducing latency and transit costs for local and regional users. Most large-scale interconnection occurs via private network interconnects within the major data centers.

Bare Metal On-demand bare metal server options are readily available from multiple providers in Phoenix. This allows businesses to deploy dedicated compute capacity quickly. Notable providers with a significant local presence include phoenixNAP and Hivelocity.

Power Analysis

Phoenix provides a stable and cost-effective power environment well-suited for mission-critical infrastructure.

Average Cost Of Power Industrial power rates typically range from $0.07 to $0.09/kWh as of September 2025. This competitive pricing makes high-density computing more economical, particularly when compared to other major West Coast markets. The energy mix is dominated by natural gas, nuclear, and a growing solar component.

Power Grid Reliability The electrical grid serving the main data center zones in Phoenix is modern, reliable, and fed by multiple substations. Major data center operators have invested heavily in redundant power infrastructure to ensure maximum uptime.

Market Access, Business & Tax Climate

Phoenix combines strategic location with a highly favorable tax structure, making it one of the most attractive data center markets in North America.

Proximity To Key Business Districts Data centers are clustered in areas like Chandler, Mesa, and central Phoenix, providing low-latency access to the region's growing technology, finance, and healthcare sectors. This proximity is critical for applications that require rapid data processing and response times.

Regional Market Reach Strategically positioned between California, Texas, and Mountain West markets, Phoenix serves as an ideal hub for reaching over 50 million people with minimal latency. It is a primary disaster recovery location for businesses operating in Los Angeles and the broader Southern California area.

Tax Advantage For Data Centers Arizona offers some of the most aggressive and beneficial tax incentives for data centers in the United States. Certified data centers and their tenants can receive exemptions from sales and use taxes on equipment purchases, which significantly lowers both initial capital expenditure and ongoing operational costs.

Natural Disaster Risk

Phoenix has a High natural disaster risk profile, with a FEMA National Risk Index score of 91.66 as of September 2025. However, the primary risks are environmental and climatic, not the catastrophic seismic or hurricane threats common to other major US markets.

Key risks for the region include:

• Drought
• Heat Wave
• Riverine Flooding
• Wildfire
• Earthquake
• Landslide

The market's insulation from major hurricane and tornado events makes it a preferred location for building resilient infrastructure for business continuity.