PHOENIX — The Phoenix metro is struggling to keep up with data center demand as it tops the nation in construction and leasing, according to real estate experts.
The Valley had 280 megawatts of absorption, which is how much new power was occupied minus what became vacant, in the first half of this year, just ahead of northern Virginia. This is a significant increase from the same time last year, which only saw about 26 megawatts of absorption in the Phoenix metro.
"This is the first year ever that anyone has absorbed more product than northern Virginia," said Mark Bauer, a managing director for JLL in Phoenix. "There continues to be some challenges of late with some of the power availability in Virginia, and I think that's where we're going to continue to see Phoenix expand."
Utility challenges in delivering electricity along high-voltage lines in northern Virginia could make it difficult for data centers to further expand in that state, according to recent reports. In the Phoenix metro, demand accelerated in 2022, while hyperscale tenants continue filling up a lot of available space, JLL's data center report for the first half of the year shows.