Metro Phoenix has become a major hub for data center development, ranking second in North America according to the latest JLL North American Data Center Report – Midyear 2025. Only Northern Virginia surpasses Phoenix, with Dallas-Ft. Worth coming in third. As demand grows, developers are expanding toward the outskirts of Phoenix to secure land for large campus projects.
The region’s appeal is driven by a reliable electricity grid and lower energy prices compared to other markets. Currently, about 1,300 megawatts (MW) of data center construction is underway in metro Phoenix, with an additional 4,154 MW planned as artificial intelligence continues to drive demand. The report notes that “power has become the new real estate,” highlighting Arizona’s competitive advantage.
Last year saw a significant announcement: a developer unveiled plans for a $20 billion data center park on 2,000 acres in Buckeye. If completed as proposed, it would be among the largest such parks nationally. In response to rapid growth across cities like Chandler, Phoenix, Mesa, and Tempe, local leaders have introduced new policies governing data center development. Tucson and Pima County officials have also acted by developing ordinances related to Project Blue—a proposed billion-dollar facility.
The Arizona Corporation Commission (ACC) is considering policy changes aimed at protecting residential and small business customers from potential cost burdens associated with increased power needs from these centers. These measures include developing new tariffs and rate structures specifically targeting data centers. Many developers are planning to provide their own power through independent generation or by financing expansions of existing utility-owned plants.
Paul Walker of Theseus LLC commented on national trends: “What you’re seeing across the U.S., the utilities are using rate structures that explicitly put all of the costs on the data centers.”
Chair Kevin Thompson emphasized the Commission’s proactive approach: “It’s important that the Commission be proactive in reviewing existing policies and potentially forming new policies to continue to safeguard ratepayers and to ensure that large users like data centers shoulder the costs of building new electricity generation and infrastructure that solely benefits a particular business or industry.” He added: ”The Commission works vigorously to ensure that our regulated utilities are not only prepared to produce enough electricity to meet peak demand during the hot summer months, but also to expand generation and infrastructure in an efficient manner to handle the influx of new residential, commercial, and industrial growth.”
According to JLL’s report—available at https://www.jll.com/en-us/insights/market-dynamics/north-america-data-centers—the vacancy rate for Valley-area data centers stands at just 2.3%. Since 2020, Phoenix’s pipeline for such projects has more than tripled; roughly five gigawatts (GW) worth of developments are either under construction or being planned.
Nationally, policymakers have identified data center development as both an economic driver and a matter of security. President Biden issued an executive order earlier this year designed to accelerate domestic AI infrastructure construction while addressing national security risks linked with these facilities. Similarly, President Trump previously issued two executive orders recognizing data centers as vital for “national security, economic prosperity, and scientific leadership” and designating their supporting infrastructure—including high-voltage transmission lines—as priorities.
