Phoenix saw a 238% increase year over year in data center absorption

PHOENIX – (August 28, 2024) – Phoenix’s data center supply grew by 150.8 megawatts (MW) in the first half of the year as developers delivered more capacity to meet growing demand, according to CBRE’s latest North American Data Center Trend Report.

Phoenix’s total inventory increased to 510.0 MW (a 44% increase year over year), leaping ahead of Silicon Valley for the first time to rank fourth largest among primary North American data center markets. The market shows no signs of slowing down, with 334.3 MW of product currently under construction in the Valley—the most since 2016.

Phoenix’s vacancy rate edged slightly down from last year’s second half to 3.3%, much in part to the 148.1 MW of positive absorption in H1 2024, a 238% increase year over year. Rental rates remained firm due to reductions in available supply and power. Lease renewal rental rates increased by as much as 20%.

“The Phoenix data center market is continuing to experience unprecedented growth, driven by significant investments from major tech companies,” said Mark Krison, executive vice president at CBRE in Phoenix. “The demand for data center space continues to surge, fueled by the increasing need for cloud services and AI capabilities. This growth is highlighted in Phoenix’s increase in supply and its emergence as a leading hub in the industry compared to other West Coast markets.”

Across North America, 515.0 MW of new supply were added in the eight primary North American data center markets in H1 2024, equivalent to adding the entirety of Silicon Valley’s existing inventory. That first-half construction increased the eight-market inventory of data center space by 10% from year-end 2023 and 24% (1,100.5 MW) a year ago.

National average rental rates rose to $174.06 per kW/month (a 6.5% increase from H2 2023) due to limited supply and strong demand. Atlanta saw the most significant pricing increase across primary markets, growing 26% year over year due to demand from AI usage. Phoenix led primary data center markets in average asking rates at $170 – $210 per kW/month. Prices nationally are expected to increase in the second half of 2024 as rising construction and equipment costs continue to affect the sector.

The demand for high-powered computing has exacerbated the pricing disparity between legacy facilities and new data centers, partially because older data centers don’t have the infrastructure to handle the power demands of today’s users. This trend is likely to persist, opening the door for tertiary markets like Northern Indiana, Idaho, Arkansas, and Kansas to draw interest from hyperscalers and developers due to available land and power availability.

Top 10 Largest Markets

To view the full report, click here.

*The eight primary U.S. data center markets are Northern Virginia, Dallas/Fort Worth, Silicon Valley, Chicago, Phoenix, New York Tri-State, Atlanta and Hillsboro.

Boutique Coffee Chain Expands its Presence with Sixth Tucson Location

SCOTTSDALE, Ariz., (August 28, 2024) – Black Rock Coffee Bar, a popular boutique coffee chain known for its premium roasted coffees, teas, smoothies, and flavorful Fuel® energy drinks, has announced the grand opening of its newest location in Tucson, Arizona. This marks the sixth store in Tucson, the 44th in Arizona, and the 143rd in the United States, further solidifying Black Rock Coffee Bar’s presence in the region.

The new Black Rock Coffee Bar, located at 2402 N 1st Ave at the intersection of N. 1st and Grant, will host its grand opening on August 29, 2024. To celebrate its grand opening, customers can enjoy free medium-sized drinks throughout the day at this new location, along with various promotions scheduled for the week.

“We are excited to grow our footprint in Tucson,” said Mark Davis, CEO Black Rock Coffee Bar. “Arizona holds a special place in our hearts. The rapid growth we’ve experienced here is a testament to the incredible support from the local community. Our baristas are the heart and soul of our brand, and each of them look forward to serve the Tucson community with a smile.”

To enhance the guest experience, Black Rock Coffee Bar recently announced the relaunch of Black Rock Rewards. This program makes it easier for rewards members to order and receive rewards quicker, whether in-store, online, or through the new mobile app. Special offers and promotions will continue post-opening through this program. Customers who register for the new loyalty program today can receive a free medium drink.

The new 2000-square-foot Black Rock Coffee Bar store showcases the boutique coffee chain’s signature industrial modern design. This design philosophy ensures that visitors can not only enjoy their favorite beverages but also relax, work, or socialize in a laidback and inviting environment.

With 143 stores across the U.S., the popular coffee chain is set to become the go-to destination for coffee enthusiasts seeking fast and friendly service. The skilled team of baristas at Black Rock is committed to enhancing the overall customer experience, making it their mission to brighten their customers’ days. Black Rock Coffee Bar’s mission is to be a positive force in the communities it serves.

Founded in 2008 in Portland, Oregon, an area of the Pacific Northwest known for its coffee excellence, Black Rock Coffee Bar continues its rapid expansion in the West and into the Sunbelt with locations in Arizona, California, Colorado, Idaho, Oregon, Texas, and Washington. The boutique coffee chain was recently named the Fastest Growing Private Company in Oregon and SW Washington in 2021 by the Portland Business Journal. In 2023, Black Rock Coffee Bar ranked 1179th among America’s Fastest-Growing Private Companies by Inc. Magazine’s 5000 Annual List.

The Black Rock culture prides itself on providing opportunities for young people to learn how to lead, run a business, and develop people skills.

Tempe, AZ (August 28, 2024) – Menlo Group Commercial Real Estate is proud to announce the successful sale of a 12,565 sq. ft. surgical center at 8841 E. Bell Rd. in Scottsdale, Ariz., which sold for more than $5.5 million.

The property was purchased by an undisclosed medical buyer, represented by Stuart Milne, SIOR, CCIM, of Menlo Group.

“We’re grateful to have facilitated the sale of this exceptional surgical center,” Milne said. “The property had several interested buyers, and our expertise in the medical real estate market brought about the best outcomes for our clients. We look forward to seeing the continued success of the new owners in this state-of-the-art facility.”

Milne and Menlo Group Executive Vice President Rich Andrus, MBA, SIOR, CCIM, also represented the seller, Pathfinder Holdings, LLC. The two companies have collaborated on dozens of commercial real estate transactions over the past eight years.

“We are happy to have completed another successful closing with the Menlo Group team,” said Patrick Brown of Pathfinder Holdings. “They continue to deliver the results we’re looking for.”