Microsoft plans massive data center campus in San Jose

Project complements company’s goal to build up to 100 centers worldwide each year.

Microsoft’s Satya Nadella and rendering of Microsoft's second data center campus in San Jose (Getty, Sheehan Nagle Hartray Architects)
Microsoft’s Satya Nadella and a rendering of one of the project's data centers (Getty, Sheehan Nagle Hartray Architects)

Microsoft has filed plans for a massive data center campus in North San Jose, one that would be among the largest of its kind in the city upon completion and ties into the company’s goal of building up to 100 new centers worldwide each year.

The software and computer accessories company wants to build a 632,000-square-foot complex on about 22 vacant acres between Orchard Parkway and the Guadalupe River near the intersection of Orchard Parkway and Component Drive. The tech company owns all but one of those acres after acquiring them from LBA Realty for nearly $79 million last year. Plans show that Washington-based Microsoft intends to acquire the remaining 1-acre lot from LBA but didn’t disclose when that would happen or the deal’s financial terms.

Microsoft seeks to build two four-story data centers, each totaling 306,000 square feet, that would house computer servers, as well as a handful of small structures aimed at supporting the centers’ operations, according to a copy of the company’s application filed with the city this week. Those structures include three water storage tanks along the site’s northwest side and two one-story buildings with mechanical and electrical equipment to help operate and maintain the tanks.

The company plans to connect the data center to an electric supply through an onsite power substation with medium-to-high voltage transformers, plans show. It intends to route electricity from a utility provider to the data center through the substation and an onsite, high-voltage switching station owned by Pacific Gas & Electric.

If the city approves the project, Microsoft would build one data center at a time. It aims to break ground on the first center in July 2024, start using it in December 2025, and wrap up construction on the other one and the rest of the campus in June 2028, plans show.

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The planned campus’ total square footage almost equals that of Microsoft’s longtime Silicon Valley office complex in Mountain View. And it’s 1.5 times larger than the company’s other planned data center complex in North San Jose. That two-building project totals nearly 400,000 square feet and encompasses 65 Microsoft-owned acres at 1657 Alviso-Milpitas Road, between Zanker Road and the banks of the Coyote River.

The company hasn’t received planning approval on either of its San Jose projects.

Despite economic headwinds and recent job cuts totaling nearly 1,000 employees worldwide, Microsoft remains a bullish investor in the data center market. It announced earlier this month that it will allocate more than $1 billion to building three campuses in North Carolina, which ties into a larger plan it unveiled last year to build up to 100 data centers annually around the globe. The company leased more data center capacity in 2020 than any other business in the U.S., and it, Amazon Web Services and Google accounted for more than half of the world’s largest data centers last year, according to data from Synergy Research Group and North American Data Centers.

While data centers play an important role in helping companies store information, they typically don’t create many jobs or much foot traffic. Microsoft’s larger North San Jose project seems in line with that norm, as it would provide about 150 parking spaces for cars, a relatively tiny amount given its size.

Data centers are typically well-secured facilities as well, given the sensitive nature of the information they house. Microsoft’s project doesn’t stray from the status quo in that regard either; plans show both entrance points for cars and delivery trucks will be gated, with vehicles screened before entry.

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