QTS Eyes 3rd Phoenix Data Center Campus

QTS Realty Trust is expanding its presence in the Phoenix area. Plans call for a 3 million-square-foot data center campus in Glendale, Ariz., called QTS PHX 3, that could include 16 buildings of approximately 180,000 square feet each.

The 375-acre development site is north of Camelback Road and west of Loop 303 along Cotton Lane. QTS acquired the property in July 2022 for $255.3 million from First Industrial Realty Trust.

Designed to meet rapid, large-scale deployments, QTS Glendale is expected to have more than 750 megawatts of critical power capacity. A 29-acre substation is also slated for the site that also has room for future growth, the Phoenix Business Journal reported.

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While development timetable was not provided, the project is expected to take several years to build once it receives approvals. QTS filed the initial plans with the City of Glendale in early 2023, several months after purchasing the site, according to PBJ.

“Data centers are large, complicated projects that require both thousands of skilled construction employees and specialized maintenance professionals once the site is in operation. We choose markets like Phoenix and Glendale because of access to a highly skilled and motivated workforce,” a QTS spokesperson told Commercial Property Executive.

QTS’ expansion in the Valley

The Glendale site will be the third location for the Blackstone-owned QTS in the Phoenix metro area. Last year, the company started building another phase at its 85-acre campus at 1200 40th St. in Phoenix. The multi-building campus is planned for 280 MW of capacity.

Another QTS data center is at 120 E. Van Buren in Phoenix. The facility has a 288,000-square-foot building and 32 MW of utility power capacity.

“QTS is investing in Arizona as a long-term partner and will continue to work with the state, counties and cities where we operate to ensure growth is additive to the area. As a colocation provider, we look to enter areas that are attractive to potential tenants as well,” the spokesperson concluded.

Private equity giant Blackstone acquired QTS, based in Overland Park, Kan., for $10 billion in June 2021. In July 2023, Blackstone announced it sold off other assets to fund an $8 billion commitment to build new data centers through QTS.

Phoenix, a growing data center market

A Cushman & Wakefield Americas data center update classified Phoenix as a primary data center market along with Atlanta, Chicago, Dallas, Northern Virginia and Silicon Valley. The report identified Columbus, Ohio; New York/New Jersey and Portland/Eastern Oregon as established markets, and Austin, Texas, as a secondary market.

The Phoenix market reached a record level of absorption of 411 MW in 2022 and was expected to surpass that in 2023 with 325 MW absorbed in the first half of the year and 276 MW under construction, according to the report. The market has a total of 1,257 MW in operation and a tight 2.8 vacancy rate as of late 2023.

The report noted all major U.S. hyperscalers either had an established foothold or extensive plans to grow in the market and colocation veterans as well as new entrants continued to acquire land and break ground on new projects.

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