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Prime Phoenix. Image courtesy of Prime Data Centers
New hyperscale data centers are coming to metro Phoenix as Prime Data Centers is getting ready to develop its first facilities in the market.
The company plans to invest $2 billion in the construction of a 210-megawatt, five-building campus that will span 1.3 million square feet in Avondale, Ariz. The first facility, to provide 42 megawatts of critical IT power, is expected to come online in 2025’s third quarter.
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“Phoenix continues to maintain strong supply and demand fundamentals due to its attractiveness to top hyperscale and wholesale data center buyers,” Executive Vice President of Acquisitions Chris Sumter told Commercial Property Executive. “Vacancy remains low, while the market had the third-highest wholesale absorption of 2022,” Sumter added.
Prime is currently working on several other expansions across primary and secondary U.S. markets. Last year, the company announced new developments in Silicon Valley and Los Angeles. In 2021, Prime started working on its first project outside California, a $1 billion campus in Chicago.
The upcoming Prime Phoenix campus
In April, Prime paid $28.9 million for 66.5 acres at 11753 W. Lower Buckeye Road, according to Maricopa County public records. The same source shows that the company received two loans from Silver Point Finance—a subsidiary of Silver Point Capital—valued at $22.2 million and $59.8 million.
At full build-out, Prime Phoenix will comprise two-story, 260,400-square-foot high-density data centers. Each building will have 120,000 square feet of white space spread across 12 data halls.
Prime is planning to use a closed-loop cooling system, which is estimated to save millions of gallons of water per year when compared to evaporative systems. Customers will have access to 100 percent renewable energy.
The developer estimates that economic growth will be generated in the form of hundreds of permanent and temporary construction jobs created with the project’s construction.
Part of a master-planned technology hub
Prime acquired the land from TGV Investments Voting Trust and Rexco DC LLC. The two Phoenix-based companies submitted a rezoning proposal back in 2021 for 308.9 acres of land dubbed Hermosa Ranch Technology Campus with the intent of developing data centers, but the plan initially received backlash from local authorities due to concerns about water usage and noise. A revised version was later resubmitted and approved, according to reporting by AZBEX.
In addition to data centers, Hermosa Ranch will also be home to a massive battery storage project. Power provider Salt River Project, together with Plus Power, announced last month that it will break ground on a 250-megawatt facility which will take shape adjacent to Prime’s upcoming campus.
Phoenix, a solid data center market
Phoenix’s data center market vacancy dropped 350 basis points year-over-year, to 8.5 percent as of December 2022, according to a CBRE report. Absorption increased by 14.5 megawatts over the same period.
Sumter told CPE that Phoenix’s market fundamentals remain strong both in the short and long term. “With modern workloads such as AI and high-performance computing increasing in popularity, the need for high-density data center capabilities will continue to grow,” he added.
Other notable developments in the market include STACK Infrastructure’s upcoming 230-megawatt campus in central Phoenix, which was announced in November last year. According to Data Center Dynamics, Vantage Data Centers has also recently acquired 34 acres in Glendale, Ariz., for an upcoming project.
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