“In the past five years, Phoenix has become more popular for data center users because of our climate, affordable power and fiber connectivity,” Mark Krison, senior vice president with CBRE, said. “I see Phoenix growing significantly in the next three to five years.”

According to a report from JLL, Phoenix saw 18.5 megawatts of net absorption in the first half of the year and has 63.6 megawatts vacant.

Krison said remote work and other changes from the pandemic will cause more demand for data centers, because employees will be using their own networks from home, rather than the networks set up by their employers for office use.

Information stored in a Phoenix data center can reach a California user almost instantly. The Phoenix metro’s abundance of flat, developable land, without some of the issues that have plagued the Golden State — such as rolling blackouts — makes the Valley attractive for data centers that serve California and other nearby states.

When major players like Apple, Microsoft and Google have chosen to locate large data centers in Phoenix, it also has attracted other users that rent out their space to companies.

“Other players say, ‘If it’s good enough for Microsoft and Google, it’s good enough for us,’” Krison said.

Data centers’ operational model also translates well for investors, said Carl Beardsley, director of capital markets for Jones Lang LaSalle Inc.

For publicly traded investors like real estate investment trusts, data centers have produced the biggest returns, producing 19.2% returns in the first half of the year, according to JLL research. The only other asset class with positive returns was industrial, with 2.3%.

Phoenix has 24 megawatts of capacity under construction, placing it fifth in the country for capacity under construction. Northern Virginia has the most under construction, with 392.5 megawatts, according to JLL.

Mark Bauer, managing director for JLL’s data center solutions group, said major users including Oracle, which has not built its own data centers in Phoenix, continue to rent space from co-location providers.

Both Compass Datacenters and Stream Data Centers are under construction in Goodyear and are expected to have commissioned space available by October, and Aligned Energy is continuing to add capacity to its north Phoenix campus because of increased demand brought on by Covid-19, according to JLL.

Phoenix has 250 megawatts planned to be built, in buildings that will total 960,000 square feet, making it the second-largest growth market, behind Virginia, Bauer said.

Some technology giants are also making a splash in the Valley. Google plans to begin construction on its $1 billion Mesa center this year. Amazon, which does not have much of a data center presence in Phoenix, is expanding in the Valley in other ways, like distribution, and could be eyeing the Phoenix area for data center uses as well, he said.