Phoenix May Not Have The Workers To Build Its Big Data Center Pipeline

The growing Phoenix data center market is not only facing a shortage of power — it’s facing a shortage of people. 

A scarcity of skilled workers needed to build and operate data centers has emerged as one of the most significant constraints limiting the data center industry’s growth.

Labor availability is now a primary consideration when it comes to data center site selection, and few markets are experiencing this personnel pinch as sharply as Phoenix, industry leaders said earlier this month at Bisnow’s DICE Southwest event held at the Hilton Scottsdale Resort & Villas.

The Phoenix market’s short supply of qualified construction and operations professionals capable of working on data centers has been driven by the industry’s rapid expansion in the region, and it has been exacerbated by the simultaneous increase of other high-tech development in the area competing for the same workers.

While some of the market’s largest players say they are taking steps to address these workforce challenges, for now, labor woes rival power constraints as the largest hurdle facing data center developers in the Phoenix area. 

“This has got to be the most competitive labor market for construction individuals in the country,” Daniel Cheney, director for mission critical at construction management software firm Doxel, said at the DICE event.

“Compared to other projects that we support, people in Arizona are just much tighter about understanding their schedule and when delays are forthcoming because if they need to secure labor, they need weeks in advance to do that properly because electrical subcontractors are split between 10 and 12 critical large-scale projects and big customers,” he added. 

Building and maintaining data centers requires a range of workers with specialized skill sets. Data center operators, developers and general contractors need skilled labor in trades like electricians, mechanical technicians and pipefitters with knowledge of data center systems. At the same time, builders need construction management professionals like superintendents and project managers with the qualifications and experience to work on data centers and other mission-critical projects. 

While local players say this talent pool is especially shallow in Phoenix, labor shortages are an increasingly acute concern nationwide for a data center industry experiencing an unprecedented building boom. More than half of data center operators last year reported being unable to fill open positions, according to an Uptime Institute survey. It found labor supply was consistently identified as one of three constraints — along with power availability and supply chain delays — preventing firms from building new data centers quickly enough to meet skyrocketing demand.

The problem may get worse before it gets better. The data center workforce is aging, and experts say the industry sits on the precipice of a “silver tsunami” — a wave of retirements that could bring these labor woes to a crisis point unless there is a dramatic uptick in the number of new workers entering the sector. 

“I'm 41, and most of my team is in their 50s, 60s and 70s — honestly, that scares the heck out of me,” said Ryan Gruver, IT director at Phoenix-based Banner Health.  “They're all talking about retirement, and I’m thinking: How do I replace you?”

The availability of this skilled labor has become a top consideration in where data center firms are looking to build second only to power availability, said Robbie Sovie, executive vice president for construction and development at T5 Data Centers.

Not only can labor shortages within a market cause delays in an industry where speed to market is critical, but workforce constraints are also causing quality control and safety issues for new data center builds, he said. 

“This industry is spread so thin that when you build a big building there are a lot of competency issues,” Sovie said.  “There's a lack of field representatives and there's a lack of superintendent and project managers that can competently put these products together. We need people to help deliver these things.”

Labor is spread particularly thin in Phoenix and a handful of other U.S. markets that have gone from relative data center backwaters to major industry hubs within the past five years, panelists at DICE: Southwest said.

Along with Phoenix, they pointed to areas like Atlanta, San Antonio, Central Washington and Columbus, Ohio, as emerging markets with limited supplies of skilled workers and where workforce development has been unable to keep pace with the sector’s explosive growth. 

The past four years have seen a data center building boom — particularly in Phoenix and surrounding communities like Goodyear and Mesa — driven primarily by demand from tech giants like Google, Microsoft, Amazon Web Services and Meta that continue to build and lease increasingly large facilities and campuses throughout the Phoenix area.

Now the primary data center hub in the southwest, the Phoenix area’s data center inventory grew 67% last year to become North America’s fourth-largest market, CBRE reported. That growth is set to continue: According to JLL, the nearly 4,700 megawatts planned or under construction in the region top every U.S. market except Northern Virginia. 

Within the past 12 months, some of the industry’s major players have launched large-scale development efforts in the Phoenix market. Amazon and QTS both acquired more than 200 acres in the West Valley for data center campuses, while Novva is building a 300-megawatt campus on 160 acres in Mesa. Meanwhile, Tract is looking to build a 2,000-acre data center campus in the Buckeye area of Maricopa County, a megaproject that could use as much as 1.8 gigawatts of power.

But it’s not just the influx of massive data center projects straining Phoenix’s labor pool. Data center builders are competing for skilled workers against several large-scale advanced manufacturing projects that are underway or have recently been completed in the region. These include chipmaker TSMC’s $165B chip fabrication plant being constructed in Phoenix, LG Energy Solutions’ $5.5B battery plant underway in Queen Creek, and automaker Lucid’s 3M SF advanced manufacturing facility that was recently completed in Casa Grande. 

According to Doxel’s Cheney, the presence of these competing industries has exacerbated the Phoenix area's labor woes beyond what most comparable markets are experiencing.  

“Not only do you have data centers, but you also have TSMC and you have LG,” Cheney said. “The increase in work and the speed of that work has been exponential, and there’s just no way to address the number of electricians and skilled pipe fitters proportionally. You can't just summon more electricians on your site to address a mistake. It could be weeks before you get that additional manpower because you're sharing it amongst dozens of competitors.”

Ultimately, alleviating Phoenix’s labor shortage will require data center builders, operators and users to engage in concerted, collaborative workforce development efforts, according to the panelists at DICE: Southwest. 

Many of the industry’s major players have such initiatives today. QTS has partnered with community colleges in the region to build a data center operations certificate program, while Microsoft runs a data center academy in the market. Similarly, the Association for Computer Operations Management sponsors scholarships, internships and speaker series that give students exposure to the sector.

Still, these initiatives haven't been up to the task of solving the market’s labor woes, panelists said. Preventing labor shortages from significantly slowing the market’s growth will require more unified, collaborative initiatives that combine resources from various industry stakeholders, said Bryan Darby, vice president for strategic technology relationships at QTS.

“We cannot work as enemies in this and look at ourselves as competition,” Darby said. “Hyperscalers, operators, manufacturers, construction organizations, engineering firms — all of us have to work together to see how we can help solve this.”