Data center construction in the Valley is continuing its rapid upswing from recent years, due in part to a business-friendly environment, dry weather and the region’s low risk of natural disasters.
Absorption rates are up 38 percent from 2019 numbers, and state leaders are working to keep the investment coming. Tax relief is a major incentive. One example, The Computer Data Center Program, which is overseen by the Arizona Commerce Authority, gives 20-year tax exemptions on certain equipment purchases.
Another appeal is comparatively affordable land prices. Data center companies often provide services to multiple states, making it reasonable to build in states with lower land and operations costs, particularly when those areas also have accommodating zoning and permitting processes, as is the case in the Valley.
Energy providers with a mixed portfolio of generating sources, such as Salt River Project and Arizona Public Service, also add to the appeal.
Demand-boosting factors for data centers like the nationwide rollout of 5G service already had the industry poised for significant growth, but the sudden surge in demand from the COVID-19 pandemic, and the ongoing lifestyle and remote work changes it brought, led data centers to outperform every other property sector in 2020, pushing expectations for future growth even higher. (Source)