As the tech world continues to expand rapidly, cities nationwide are hustling to keep pace with the burgeoning demand for data center development. Recent figures from the JLL North American Data Center Report – Midyear 2025 place metro Phoenix as a major player, securing the No. 2 spot in North America for planned data centers. Northern Virginia holds onto the leading position while Dallas-Ft. Worth falls just behind Phoenix, rounding out the top three, as reported by the Arizona Corporation Commission.
With a critical eye on future gains, operators in Arizona are to quickly secure land before prices spike. The state boasts a robust and reliable electricity grid paired with lower-than-average electricity costs, shaping it into a coveted destination for data center operations. Currently, approximately 1,300 MW of data center development is under construction, and another 4,154 MW are planned, as artificial intelligence drives up demand, as per the Arizona Corporation Commission.
Recognizing the rapid expansion, city leaders across Arizona are crafting strategies to manage the surge in data centers. Chandler, Phoenix, Mesa, and Tempe have already adopted policies tailored to this growth, following the lead of Tucson and Pima County, which enacted ordinances in response to billion-dollar projects like the proposed Project Blue facility. Meanwhile, the Commission is weighing additional measures to shield residents and small businesses, including new tariffs and rate tiers aimed specifically at data centers.
Chair Kevin Thompson of the Commission emphasized the need for proactive policy revision. "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,” Thompson stated, as detailed by the Arizona Corporation Commission.
Phoenix’s rise as a data center hub is clear in its project pipeline, which has more than tripled in capacity since 2020—now totaling nearly 5 GW of projects under construction or in planning. Beyond sheer infrastructure growth, data centers have taken on a prominent role as economic and defense priorities. Earlier this year, President Biden issued an executive order to accelerate AI-related infrastructure development, echoing mandates from President Trump that classified data centers as vital to national security and economic prosperity.
