Jon Gillespie, land use attorney at Rose Law Group: “This Goldwater article provides an excellent description for the lay of the land with regards to data centers and provides a perspective that cities are not fully considering. Today’s society is reliant on data centers to a degree that many just don’t realize. And the opportunity for immediate economic impact, building out long term electrical infrastructure, and leading in the tech industry are getting passed by. Oh, and don’t forget private property rights are still a thing.”
Data Centers – A Free Market Model for the Digital Future
By Jen Springman and William Beard | Goldwater Institute
The Unseen Engine of the Digital Age
The future is already here. Movies stream instantly. Video calls span continents. Artificial intelligence (AI) answers questions in fractions of a second. Yet the physical components that make this digital life possible remain largely unseen. That machinery is the global network of data centers—the industrial backbone of the modern economy. As new technology hits the market to make our lives easier, the volume of data generated and processed grows rapidly, driving demand for ever-greater computing capacity.[1] Arizona should embrace the free-market principles that will allow this new digital future to take root.
The Greater Phoenix metropolitan area has emerged as one of the most significant data center hubs in North America, making our state a hotbed for large-scale digital infrastructure development. For Arizona residents, the scale and speed of this transformation have been striking. Industry rankings consistently place Phoenix among the top U.S. data center markets, often second nationwide in planned development. Current projections estimate a 553% increase in capacity, reaching roughly 5,340 megawatts of IT capacity, with more than a gigawatt already under construction.[2]
This growth is part of a broader national competition. The United States leads the world in data center capacity, and states actively court these facilities through tax incentives and regulatory certainty, recognizing their role as economic engines. The result has been the emergence of “data center alley” regions in states such as Virginia, Texas, and Oregon. Virginia alone hosts nearly 600 facilities, leveraging its proximity to federal institutions and core internet infrastructure.[3]
The stakes could not be higher. Data centers will underpin the future of the United States, providing economic strength and national security, driving economic growth, creating thousands of high-paying jobs, and securing the foundation for American technological leadership. As of March 2025, there were 5,426 data centers in the United States. Some industry projections anticipate a doubling or tripling of that number within a few years.[4] McKinsey estimates that “by 2030, companies will invest almost $7 trillion in capital expenditures on data center infrastructure globally,” with over 40% of that invested in the United States.[5]
Artificial intelligence has dramatically accelerated these trends. Demand for data has increased exponentially. How communities, businesses, and policymakers respond to this transformation will shape economic competitiveness for decades to come.
History offers a clear lesson: Innovation sometimes provokes fear, particularly from established interests who often work to trigger anxieties in the population about scale, speed, and control. Caution has a role in policymaking, but fear is not a substitute for good decision-making. The digital age is not a hypothetical future. Public policy must be grounded in economic reality and the protection of private property, not in reflexive opposition or manufactured controversy. Ignoring technological change does not stop it. Instead, it simply guarantees that opportunity will migrate elsewhere.
There’s an easy choice for Arizona leaders: It’s time to choose to embrace the future, not run away from it.
