DATA CENTERS
KEEPING US CONNECTED Why Greater Phoenix is a data center darling By KYLE BACKER
Data centers in the Greater Phoenix area saw absorption rates up 38% compared with 2019, with supply struggling to keep up with demand. This surge is due in part to technology’s centrality in modern life that was exacerbated by COVID-19. “With the growth of the internet, practically everything you do runs through a data center somewhere in the world. Every time you check your phone, that request is processed by a data center,” says Mark Krison, senior vice president at real estate services firm CBRE. While the pandemic may be waning, data center construction throughout the Valley is not, thanks to a favorable business environment, lack of natural disasters and the ubiquity of online services.
EASE OF ACCESS Like many states, the Arizona legislature has crafted programs to incentivize companies to invest here, primarily in the form of tax relief. The Computer Data Center Program, administered by the Arizona Commerce Authority, encourages data center expansion in the state by providing a 20-year tax exemption at state, county and local levels on certain equipment purchases. “It’s the biggest hook we have,” explains Mark Bauer, senior managing director of the JLL Data Center Solutions Group. “A company refreshes its servers every three to five years. Let’s say an average rack of servers costs $1 million, and the company is going to refresh 20 racks. That $20 million investment isn’t subject to an 8.6% sales tax.” The Valley also has something that can’t be legislated: affordable land. “In the last 36 months, data center developers have taken advantage of the availability of reasonably priced land in the region to expand their operations. All these co-locating companies, such as Compass Datacenters, Stream Data Centers and Vantage Data 42 | May-June 2021
