San Jose and Pittsburg Tapped for Data Center Development

Developers of Bay Area data centers are aiming beyond Santa Clara to nearby San Jose and distant Pittsburg.

The Bay Area data center market is moving past Santa Clara, with San Jose and Pittsburg becoming new development hotspots, according to the Silicon Valley Business Journal, citing a report from Colliers.

Santa Clara has long dominated Silicon Valley data center development by taking advantage of lower power costs.

But now San Jose has opened its arms to data center development. And Pittsburg has ratcheted down its power costs.

At the same time, Santa Clara faces longer timelines for large-scale power access, according to Raul Saavedra, who leads Colliers’ Americas data center advisory practice.

He said Bay Area site selection is largely driven by time-to-market, power availability and proximity to Silicon Valley. It’s not clear how Pittsburg, south of Suisun Bay and more than 60 miles from Santa Clara, factors into the mix.

Hayward also has data center activity, he said, though it’s less documented.

“Everything was really focused on Santa Clara before, but now you have this creep into San Jose,” Saavedra told the Business Journal.

Last year, San Francisco-based Prologis and Australia-based Goodman Group announced major data center projects in San Jose.

Prologis plans to build 1.7 million square feet of data centers across four buildings. And Goodman Group plans to construct two data centers containing 414,000 square feet.

Saavedra said Pittsburg offers lower utility costs and the ability to build larger data centers, in phases. Avaio Digital Partners, based in Connecticut, plans to build a 340,000-square-foot data center there, according to the Business Journal.

San Jose has about 43 million square feet of industrial buildings, with a 6.5 percent vacancy, according to the Colliers market report.

Local data center demand is being driven largely by hyperscalers, Saavedra said. He said most projects are unlikely to break ground without a committed tenant, while construction costs, entitlement hurdles and power access make speculative development risky.

California regulators have set up limits on data center size, which prevent single data centers reaching more than 100 megawatts.

In Northern California, the data center market grew 2 percent between 2024 and last year, trailing other major markets, according to Colliers. Meanwhile, Dallas-Fort Worth grew 67 percent and Northern Virginia grew 10 percent.

– Dana Bartholomew