Phoenix is the sixth-ranked data center market in the country, based on the impressive leasing activity in the Southwest city last year. Research from CBRE, which ranked the top data centers in the nation, found that Phoenix absorption increased 38% last year while the vacancy rate fell to 6.7%, the lowest level since 2016.

"Leasing demand has increased for a combination of reasons that have created a bit of a perfect storm. The expansion of 5G but also the broad work-from-home experience contributed to an increase in data center demand. Between the public cloud and private cloud with enterprise companies trying to expand space and power to accommodate internal demand, data centers have been in high demand," Mark Krison, SVP at CBRE, tells GlobeSt.com. "We had expected robust demand from enterprise companies, but COVID and its effects increased it exponentially."

The activity is particularly impressive considering that 9 MW of new supply delivered in the market last year. The supply, however, stabilized pricing, which remained at $115 per MW. This will likely drive continued activity in 2021. "Activity has been good for pricing from the end user and tenant perspective. Owners are very aggressive now and rents have stabilized. So going forward, tenants will see good lease opportunities," says Krison.