Goodman Group Buys San Jose Data Center Site From LBA Realty

A site in north San Jose proposed for a data center development just changed hands in a $200 million deal.

A Goodman Group affiliate bought the property at 350 and 370 West Trimble Road from an LBA Realty affiliate in an all-cash deal, the Silicon Valley Business Journal reported.

The 46.8-acres is mostly vacant land but also has an office complex partially occupied by lighting manufacturer Lumileds.

LBA floated building a tech village of offices, shops, restaurants and a hotel on the site in 2019. Three years later, the Bay Area developer changed course, submitting another proposal for an advanced manufacturing site. It never started construction.

LBA submitted a development permit to the city of San Jose earlier this year to build a 207,950-square-foot data center on the site. Goodman Group is known for developing, owning and managing logistics and data centers in cities around the globe.

Properties next door are owned by Microsoft. LBA Realty sold off two adjacent sites to the tech giant in 2021 and 2023. Microsoft paid a combined $84.3 million for them, the Mercury News reported.

Microsoft is charging full steam ahead with its embrace of artificial intelligence, and itproposed building two data centers spanning 300,000 square feet on the adjacent parcels along Orchard Parkway. The construction permit for those projects have since expired without shovels hitting dirt. Earlier this year, the company announced it would spend $80 billion to build data centers this year.

Meanwhile, another data center is headed toward construction in downtown San Jose.

Vancouver, Canada-based developer Westbank submitted a proposal to the city’s Planning Department in August to build 391 housing units next to a data center at 180 Park Avenue as part of Westbank’s Park Habitat development. That data center is meant to benefit Pacific Gas & Electric by capturing the excess heat from the facility to provide low-cost, low-carbon energy to nearby residents.

The booming AI sector has been helping revitalize the Bay Area’s office market after years of post-pandemic doldrums, particularly in San Francisco. More than 50,000 new employees are expected to flock to the region over the next five years, according to CBRE’s estimates.

The South Bay and Peninsula are similarly attracting AI tenants. As AI grows, so too does the need for data centers, so it’s likely more will continue to pop up in the Bay Area in the coming years.

— Chris Malone Méndez