Power Grid Strain Is Blocking Industrial Deals in Arizona’s Fastest-Growing Market

Written by:

Steve Marcinuk

Date:

04 Jan 2026

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Arizona’s West Valley industrial market has become one of the nation’s busiest logistics corridors. Still, rapid growth is exposing a critical weakness: the region’s power grid cannot keep up with demand, risking delays to future projects.

Jim Roland, Senior Vice President of Arizona Operations at Alcorn Construction, says power infrastructure has become the single biggest obstacle to advancing industrial projects. “There’s been a large tax on our power grid, and the expansion of it, and it’s just slowed our ability to develop at the rate that everybody wants to,” Roland says.

The problem is particularly acute for speculative (spec) industrial buildings, which are typically constructed before tenants are secured. According to Roland, this approach is failing because many prospective tenants cannot sensurethe power capacity required for their operations.

How Data Centers Created the Bottleneck

Roland identifies data center development as the main driver of the current power shortage. “We’re the new data center hub of the country,” he says. “It seems there’s been a large tax on our power grid and the expansion of it.”

Arizona’s emergence as a national tech infrastructure hub has put enormous pressure on regional power authorities. Roland notes that grid expansion has not kept pace with the scale and speed of industrial development along the Loop 303 corridor and surrounding areas.

This has created a situation in which developers are reluctant to build spec projects if they can’t guarantee tenants will have sufficient power. “A client is less inclined to build a spec building if you can’t fill it with the tenant, because the tenant can’t get power to their building,” Roland explains.

Where land availability and freeway access once drove development decisions, power infrastructure has now become the primary constraint in Arizona’s industrial market.

Contractors Becoming Infrastructure Problem-Solvers

The power grid challenge is forcing contractors to take on a more active role in solving infrastructure problems. Roland says contractors are now expected to help clients secure power, often by working directly with utility authorities and developing temporary solutions. “That’s us as a contractor, not walking away from a client, but helping a client figure out how to make that work, what it takes to get them some form of temporary power, how to work with the power authorities out here to come up with proactive solutions,” he says.

This expanded role means contractors must coordinate infrastructure timelines with tenant acquisition strategies and secure interim power solutions to bridge gaps in permanent utility capacity. “We work closely with the tenants too, to make sure that they’re getting what they need on top of it, so that it’s not just one entity that we’re dealing with,” Roland adds.

Contractors now need to factor utility coordination into every project, making it as central as construction schedules and budgets. Roland describes this as “trying to be all encompassing and thinking through the process and helping Phoenix advance and helping this area evolve into what the vision is of the marketplace and the hub that it can be for everybody.”

Market Implications Beyond Arizona

The infrastructure constraints Roland describes could become a significant issue for other fast-growing industrial markets across the Sunbelt. As data centers and advanced manufacturing facilities increase their demands on regional grids, similar bottlenecks may emerge elsewhere.

For developers considering Arizona, Roland’s experience shows that power availability must now be regarded as rigorously as land cost and transportation access. The traditional spec development model may need to shift toward more tenant-driven approaches, aligning construction timelines with utility expansion.

Emerging Solutions in Practice

Alcorn Construction’s strategy for addressing the power shortage centers on early collaboration with utility authorities and implementing creative interim solutions. Roland says the company works to “come up with proactive solutions that will meet the timeline associated with securing a tenant for a client.”

This approach has enabled Alcorn to keep projects moving despite grid limitations. The company operates across the industrial, hospitality, multifamily, Native American gaming, medical office, and retail sectors, focusing on design-build and design-assist work that enables early problem-solving.

Whether other contractors and developers will adopt similar strategies depends on how quickly Arizona’s power authorities can expand grid capacity to support the region’s industrial growth. For now, power availability is a central factor in determining which projects can proceed in one of the country’s fastest-growing industrial hubs.