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Data Center Providers, Demand Expanding

JLL report cites electricity prices, tax incentives and M&A growing data center market footprint

Graph credit: JLL

Source: JLL

As more global companies move data and information to the cloud, the cloud itself is actually moving closer to them. According to JLL’s annual Data Center Outlook, several North American data center markets – including Phoenix – have emerged as hotspots as operators and cloud providers follow affordable utility rates, tax incentives and a demand for expanded service offerings. For an industry expected to see revenue grow by 14 percent over the next two years, footprint flexibility has proven to be a key driver.

In Phoenix, utility costs hover around 6.2 cents per kWh thanks to Arizona’s diverse fuel supply mix. This is an attractive rate compared the national average of 7.4 cents per kWh of the markets JLL surveyed. In Phoenix, it has spurred demand from several key industries: technology, retail and e-commerce, and banking and finance (together making up 80 percent of the market). The remaining activity comes from telecom, healthcare and insurance users.

While local demand has been modest during the first half of 2015, Phoenix is on track for a promising fourth quarter of absorption, comparable to the significant activity achieved in fourth quarter 2014. Aligned Data Centers is delivering new data center space to accommodate for local and out-of-state demand.

According to the JLL report, this includes ushering in a more competitive pricing matrix and flexibility and providing a window of opportunity for new players to deliver modern inventory and fill timely requirements.

Aligned is in the process of retrofitting a 550KSF project at 2500 W. Union Hills Dr., in the Deer Valley/North Phoenix submarket. Aligned’s $150M retrofit will re-introduce a property that has been vacant for nearly eight years and will also reposition the building to follow the company’s platform – allowing users to buy the capacity they need and scale incrementally as compared to traditional colocation providers who operate on fixed contracts.

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