Lincoln Property Company has reacquired a partially-occupied data center in Chandler, Arizona, signaling a significant investment in the region's booming digital infrastructure. The Dallas-based real estate firm plans a major build-out of the vacant space, with a focus on delivering ready-to-use capacity in a market with critically low vacancy rates.
The project, located near the intersection of Loop 101 and Loop 202, also includes the installation of an advanced cooling system designed to drastically reduce water consumption. This move addresses one of the key environmental challenges facing data center operators in the desert southwest.
Key Takeaways
- Lincoln Property Company purchased a data center in Chandler it previously owned from 2018-2019.
- The firm plans to develop the unused space to provide turnkey data capacity, which is in high demand.
- A new cooling system aims to save millions of gallons of water monthly, addressing sustainability concerns in Arizona.
- The Phoenix metro area is the nation's fourth-largest data center market with a vacancy rate below 2%.
- The facility is expected to be ready for lease by the first quarter of 2026.
Strategic Move in a High-Demand Market
Lincoln Property Company's decision to buy back a familiar asset underscores the intense competition for data center space in the Phoenix metropolitan area. The property, located off Frye Road, was previously part of Lincoln's portfolio between 2018 and 2019 before being sold.
The sellers in the latest transaction were CBRE. The reacquisition allows Lincoln to leverage its prior knowledge of the site for a rapid development timeline. The company aims to have the new space ready for tenants by early 2026.
"This facility will add critical turnkey capacity with immediately available utility power," said Ryan Sullivan, National Data Center Group Leader for Lincoln Property Company. "It’s a rare combination that we look forward to delivering as part of our ongoing value-add data center strategy."
The term "turnkey" is crucial, as it refers to data center space that is fully built out and ready for immediate occupancy. In a market where demand far outstrips supply, providing such facilities gives a company a significant competitive edge.
Why Reacquire a Property?
Companies sometimes repurchase assets they previously owned for several strategic reasons. Familiarity with the property's infrastructure, zoning, and utility access can significantly shorten development timelines. It also allows a firm to capitalize on changed market conditions, such as the explosive growth in demand for data centers seen in recent years.
Addressing Power and Water Challenges
A central component of the renovation plan is the implementation of a new cooling system. Data centers generate immense heat and require constant cooling, which has traditionally been a water-intensive process. This has raised environmental concerns, particularly in arid regions like Arizona.
Lincoln Property Company stated that the new system is projected to save millions of gallons of water each month compared to conventional cooling methods. This focus on efficiency is not just an environmental consideration but also a critical business strategy, as access to water and power are becoming major factors in site selection for data center operators.
The facility's immediate access to utility power is another key advantage highlighted by the company. With the electrical grid under increasing strain from the proliferation of data centers, securing adequate power is a primary challenge for new developments.
Phoenix Data Hub: The Phoenix metropolitan area is the fourth-largest data center market in the United States. The vacancy rate for available space is currently under 2%, one of the lowest in the nation, reflecting intense demand from technology, cloud computing, and artificial intelligence companies.
Phoenix's Role as a Digital Crossroads
The Chandler acquisition is the latest example of Greater Phoenix's emergence as a top-tier destination for digital infrastructure. The region offers several advantages that make it attractive to data center investors and operators.
Key Regional Advantages:
- Low Risk of Natural Disasters: The area is relatively safe from hurricanes, major earthquakes, and other natural events that could disrupt operations.
- Favorable Business Climate: Arizona has actively courted technology companies with tax incentives and a supportive regulatory environment.
- Robust Fiber Optic Connectivity: The region is a major hub for long-haul fiber optic cables, providing fast and reliable connectivity to other major markets.
These factors have created a self-reinforcing cycle of growth. As more data centers are built, the region's digital ecosystem becomes more robust, attracting even more investment from companies that need to store and process vast amounts of data.
Lincoln's Expanding Arizona Footprint
This data center adds to Lincoln Property Company's already substantial presence in Arizona. With this purchase, the firm's Phoenix portfolio now encompasses 23.2 million square feet of commercial real estate.
The company's holdings include several high-profile industrial and office developments, such as Park303, Luke Field, Goodyear AirPark, Union, and the Grand at Papago Park Center. This diverse portfolio demonstrates a deep and long-term commitment to the Arizona market.
David Krumwiede, Senior Executive Vice President at Lincoln Property Company, commented on the firm's history with the Chandler site. "We originally purchased and managed this facility to achieve its highest and best use," he said, indicating a long-term vision for the property that aligns with current market demands.
As the digital economy continues to expand, investments like this one in Chandler are critical for building the physical infrastructure that underpins our increasingly connected world. Lincoln's project is poised to deliver much-needed capacity while setting a new standard for resource efficiency in the industry.
