The data center sector is booming. By the end of 2017, markets in the United States saw approximately 315 megawatts in net absorption, according to JLL’s 2018 Data Center Outlook. This accounts for more than half of the overall absorption rate of 583.5 megawatts across top global markets. Europe, Middle East and Africa came in second with a total 135 megawatts, while the Asia-Pacific region reached about 85 megawatts.
As far as construction trends are concerned, U.S. regions still take the crown with 188 megawatts in the pipeline. The top-tier markets remain Northern Virginia, Chicago and Silicon Valley. Other markets are catching up fast, however.
GROWING TECH HUB
Phoenix is one such area, with a rapid growth that does not show signs of slowing down. CBRE’s 2018 Market Outlook defines it as a maturing data center market, along Atlanta, Minneapolis and Portland. At the end of 2017, it saw a net absorption of 29.9 megawatts, an 80 percent increase since 2016, JLL reports. Furthermore, the metro is quickly becoming a bona fide technology hub. A Robert Half Technology survey estimates an increase of roughly 8 percent in tech employment, with the likes of Intel to invest billions of dollars and to create thousands of jobs in Chandler, Ariz.
Large data center operators have a solid footprint in Phoenix and are constantly consolidating it as demand for IT solutions grows. CyrusOne is expanding its campus in Chandler, Digital Realty Trust will build a new 17-acre facility in the same area, while EdgeConneX recently closed on a 47-acre land deal in Mesa for new development.
AN INSIDER’S VIEW
Aligned Energy is among the key players in this market. Founded in 2013, the company currently operates a 550,000-square-foot, 120-megawatt , where construction on a new expansion is currently underway. The company adopts a build-to-scale strategy when developing new facilities, building them in a way that allows a rapid incremental addition of capacity according to needs.
Commercial Property Executive talked to Andrew Schaap, CEO of Aligned Energy, for a more in-depth view on why Phoenix is such an attractive market right now. Schaap, who joined Aligned Energy in 2017 with an experience of more than a decade in the sector, outlined his views in the four responses below.
What is Aligned Energy’s role in this fast-growing market?
Schaap: As we continue to grow and attract more clients to our adaptive data centers we expect to see further impact on the demand for capacity. This is a strong market for so many reasons, and we have a vested interest in this community. From sustainable, renewable energy to new cooling technology that sets new levels of power efficiency, we believe that this market is conducive to realizing our vision for the future of data centers.
Arizona tax advantages are partially responsible for Phoenix being such an attractive market for data center clients and operators. What other key factors are worth mentioning?
Schaap: Beyond the tax advantages, that is attractive nationally for data center colocation needs in the western U.S. They have a diverse economy and are an established tech hub. Large corporate enterprises and web scale companies view Phoenix as a strategic market given its low risk for natural disasters, educated workforce, proximity to other major western markets, stability of the electrical grid, telecom resources, focus on sustainability and overall pro-business environment.
As a maturing data center market, how do you see Phoenix evolving in the near future?
Schaap: Phoenix is growing into a major data center market in the U.S. I think we will continue to see strong demand driven by the digital economy and rapid cloud adoption. The market is well positioned for the future and we’re excited to be a part of it with our 550,000-square-foot, 120-megawatt data center in North Phoenix.
Moving on to the broader picture, how does Aligned Energy gauge itself in 2018, a year expected to exceed 2017 in total data center investment volume?
Schaap: We believe we are uniquely positioned in the data center industry with our dynamic data center platform that efficiently adapts to client workloads, which, like IT in general, is becoming more variable. Customers require support for both legacy applications as well as modern IT infrastructure and thus our ability to flex from low density to high density—in the same footprint—provides our clients with strategic and operational benefits. In parallel, our ability to rapidly scale and provide our customers with exceptional service positively positions us for a successful 2018.