DivcoWest Sells Sunnyvale Data Center to Brookfield

As the Bay Area becomes a global capital for the artificial intelligence boom, real estate investors are scrambling to get a piece of the pie by sinking their money into data centers and other AI-serving infrastructure.

Brookfield Properties just added to its data center collection with the $90.3 million acquisition of a data center in Sunnyvale, Mercury News reported, citing documents filed Wednesday with the Santa Clara County Recorder’s Office.

Bay Area real estate firm DivcoWest sold the property at 255 Caspian Drive nearly a decade after purchasing it in 2017 for $50 million. Data center owner and operator Equinix is the tenant in the 120,000-square-foot building. Equinix itself bought half a dozen buildings in San Jose earlier this year for $51 million, ostensibly with data center plans.

Brookfield has been doubling down on data centers over the past year as computing needs ramp up and AI firms expand in the Bay Area and beyond.

In October, Brookfield subsidiary CSquare announced it was spending $1 billion to acquire 10 data centers across North America. The following month, the Brookfield arm reached into the South Bay, spending $97 million on two data centers in Santa Clara, which neighbors Sunnyvale. Brookfield’s latest acquisition on Caspian Drive in Sunnyvale is roughly two miles west of the Santa Clara purchases.

The South Bay has become one of the Bay Area’s hubs for data center activity, including development. A recent report from Colliers found that San Jose has become a hotspot for new data center development, further cementing its place as the beating heart of Silicon Valley. Prologis plans to build 1.7 million square feet of data centers across four buildings in San Jose, while prolific data center developer Goodman Group plans to construct two data centers totaling 414,000 square feet.

Some developers in the South Bay are pivoting their efforts to data centers to meet demand.

Earlier this year, Menlo Equities announced it was abandoning its previously approved plans for a 400,000‑square‑foot office and life sciences campus at 888–894 Ross Drive in Sunnyvale, instead cutting the project by roughly 200,000 square feet and replacing the multi-building research and design concept with a two‑story data center and an adjacent Pacific Gas and Electric Company substation to support the project’s hefty power requirements. PG&E has already started upgrading and expanding its electrical system in the South Bay as more data centers come online, Mercury News reported.

— Chris Malone Méndez