Phoenix data center market poised for growth

CBRE is confident the Phoenix metro area's available and growing data center supply will be met with enough demand by the market.

26 October 2011 by Yevgeniy Sverdlik - DatacenterDynamics

As it continues its transformation from a second-tier data center market preferred by corporate America as a place for disaster-recovery sites rather than a location of primary data center infrastructure, the greater Phoenix area has all the attributes for continued growth.

The market has ample available commercial colocation space and a lot more is due to come online in the near future. Power rates remain low, hovering between US$0.06 and $0.07kWh, according to the latest report on the market by the real-estate services company CBRE, and demand for data center services is robust. The market's total supply of live wholesale data center space is about 830,000 sq ft, according to CBRE.

Most of that supply is occupied, with about 92,000 sq ft of vacant space. The inventory of vacant wholesale space is expected to expand in the near term, with 160,000 sq ft of raised floor under construction and slated to come online by the second quarter of 2012.

There is also plenty of powered-shell buildings in the area (more than 2m sq ft) and possible green-field sites with available power, CBRE reports. Luke Denmon, with CBRE's critical environments practice, said companies holding most of the available space were Digital Realty Trust, Phoenix NAP and i/o.

Another big player recently entered the market with a splash. CyrusOne announced plans to build a 1m sq ft data center in the Phoenix area – capacity that will come online in chunks. Demon said CyrusOne's entry was “a vote of confidence for Phoenix.” Denmon is confident that the space available now will get absorbed fairly quickly if the economic conditions are favorable. The market absorbed between 18MW and 20MW of capacity in 2010, he said.

“That was a slow data center year.” “The amount of space and amount of power that we have, we can absorb all of that in 2012, given the users that have been exploring Phoenix.”

The typical end users in the area are large enterprises, providers of Cloud services and “all of those users whose core business revolves around IT,” Denmon said. He also expects a lot of demand to come from Fortune 1000 companies, many of whom have been putting off investment in IT over the past several years and cannot put it off any longer. These organizations are working hard to increase efficiency and modernizing IT is one of the ways to do that.


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