Phoenix Rising

Nathan Milkins • October 11, 2022 • 3 minute read

AI/ML, Enterprise Bare Metal, Colocation in Data Centers

It’s a bright future in the Valley of the Sun for the data center market

Phoenix is fast becoming the data center darling of the United States. A recent article in Data Center Frontier notes that the city is now among the most popular in the country for data center capacity, rounding out the Top 5 list which includes Northern Virginia, Silicon Valley, Dallas, and Chicago. While its growing popularity as a data center hub has helped to propel Phoenix forward, city leaders are banking that there’s more to come. Much more. Consider that while current commission power is approximately 458MW, the city’s planned power exceeds 1.63GW, and planned data center space is more than 8.8 million square feet.

Much of Phoenix’s growth can be attributed to the fact that it’s everything California is not — to wit, more affordable and low risk. Cost efficiencies can be realized for power, real estate, and staff. Coupled with a low chance of natural disaster, these factors have been the key drivers behind the great data center exodus from California and other, higher cost states. It’s no wonder that several Fortune 500 companies, including United Health, CVS, Apple, and Amazon have set up shop in the Valley of the Sun.

So, what specifically is behind the Phoenix’s rising fortunes?

Taxman giveth

In an effort to lure data centers to the Phoenix market, Arizona offers a 10-year state, county, and local sales tax break on equipment and labor services. And that waiver bumps up to 20 years if the data center qualifies as a Sustainable Redevelopment Project. Additionally, corporate income tax comes in at a favorable 4.9 percent with unemployment tax at a mere 2 percent.

It’s all about your connections

Phoenix has top-notch fiber infrastructure, including Lumen, Zayo, and Windstream, all three of which we offer customers in our PHX1 and PHX2 data centers via the Cyxtera Marketplace. Lumen and Zayo both run long-haul fiber connections through Phoenix, while Windstream has developed locally focused fiber networks.

It’s electrifying

Arizona boasts some of the lowest power costs in the country with rates falling well below the national average. By comparison to other major U.S. data center markets, especially those in nearby California, Phoenix offers an attractive price point.

Low risk, high reward

Unlike its neighbor to the West, Arizona is blessed in that it’s at low risk for natural disasters. Not only does it not sit on a major fault line, but the chances of flooding are extremely low and the risk of a hurricane is non-existent.

Startup friendly

According to a study conducted by Real Estate Witch, Phoenix is one of the best places in the country to start a business. Its lower cost of living means that Phoenix workers earn, on average, annual salaries of $51,851 — 18 percent less than the studied city average of $63,363. Lower operations costs mean more money available for getting the business up and running.

Phoenix has been rated as the second best in the country in which to launch a startup and has become the tech hub of the state. It also boasts strong employment growth in the e-commerce, financial, insurance, and tech sectors.

The Cyxtera value prop

Cyxtera has two AI-ready data centers offering reliable connectivity and low latency for data redundancy and mission critical operations in the Phoenix metro area. With more than 145K square feet of raised floor space, Cyxtera offers enterprises of all sizes and stages room to grow.

Whether startups or members of the Fortune 500, today’s companies need to future proof their businesses. With the Digital Exchange, companies can customize the way in which they build, operate, and scale their operations, ensuring that they have the right infrastructure in place when they need it in a consumption-based model:

  • Secure, direct access to hyperscale cloud providers via Cyxtera Cloud Connect, in addition to access to on-demand compute, storage and network solutions
  • NVIDIA DGX™ A100 systems that give enterprises and partners a new standard when it comes to managing AI workloads and building their AI strategy

To learn more about our Phoenix data centers, please visit:

Views and opinions expressed in our blog posts are those of the employees who made them and do not necessarily reflect the views of the Company. A reader should not unduly rely on any statements made therein.

Phoenix Rising

The Valley of the Sun is a hot spot for data center expansion, due to tax benefits, a top-notch fiber infrastructure, and lower power costs.

Learn more about Cyxtera’s AI-ready data centers in Phoenix

Nathan Milkins

Market Account Director for Central Region