Tract has bought 2,100 acres of land outside Phoenix for a future data center campus for $136 million.
The Denver-based developer purchased the agricultural and undeveloped land to develop a $20 billion data center campus in Buckeye, 37 miles west of Phoenix, the Phoenix Business Journal and the Wall Street Journal reported.
The seller was Arizona Land Consulting, based in Phoenix. The deal works out to $64,762 per acre. Brokers Phil Haenel, Will Strong, Mike Haenel and Andy Markham of Cushman & Wakefield represented Arizona Land in the sale.
In 2022, Arizona Land bought the property south of Interstate 10 and west of Buckeye Municipal Airport for $40 million, or $19,048 per acre.
The startup data-center land-development firm will serve as master developer for one of the nation’s largest data-center complexes to support artificial intelligence, cloud computing and other Internet technologies.
Construction of the $20 billion, 1.8 gigawatt campus, with 40 facilities across 20 million square feet, could take 15 years. The site lies west of Johnson Road on both sides of Southern Avenue.
Tract was founded in 2022 by former executives of Level 3 Communications, a Colorado-based company that helped build the Internet. It owns or is in contract to buy 23,000 acres of U.S. land.
“Ten years ago a company would go out and buy 15 to 20 acres and build a data center,” Graham Williams, chief investment officer of Tract, told the WSJ. “Now we’re talking about 500- to 1,000-acre campuses.”
Tract generally buys land for data centers, then obtains the necessary zoning and permits for projects. The firm develops the infrastructure on the sites, adding roads, water, sewers, power and fiber.
The developer then hopes to sell the improved properties to data-center developers or owners of so-called hyperscale data centers like Amazon.com, Google and Microsoft. Tract typically spends $100 million to $150 million on a site to prepare it for sale, Williams said.
The Buckeye City Council this month unanimously approved an agreement with Tract to move ahead, with $50 million in public infrastructure reimbursement from the city. Tract is now working with Arizona Public Service, the utility that serves greater Phoenix, to make sure power will be available for the project.
In the first half of the year, the data center industry in greater Phoenix had nearly 150 megawatts of net absorption, according to CBRE Group, with an inventory of 510 megawatts and 334 megawatts under construction. The region had 3.3 percent vacancy, the lowest since 2016.
Data centers throughout the U.S. now offer 6.7 gigawatts of capacity, excluding those owned and occupied by one tenant, according to CBRE. Facilities with more than 4.5 gigawatts of capacity will break ground by next year. One gigawatt is enough to power 750,000 homes.
For the first time, greater Phoenix also topped Silicon Valley in new supply year-over-year with 150 new megawatts. Phoenix now ranks fourth in the nation for total inventory behind Northern Virginia’s 2,611 megawatts, Dallas-Fort Worth’s 591 megawatts and Chicago’s 589 megawatts.
— Dana Bartholomew
Read more
