SAN JOSE — A housing tower and data center project may sprout by year’s end at a choice downtown San Jose site, marking the launch of a push to transform the city’s urban core into a green energy hub.
Utility titan PG&E, high-profile developer Westbank and San Jose city leaders are eyeing eco-friendly housing towers and data centers as ways to pave pathways of innovation that can create a green energy downtown
Canada-based Westbank, a developer with a global reach, is planning multiple housing projects at downtown San Jose sites the real estate firm owns where residential highrises would be built next to data centers.
A vacant lot at 323 Terraine Street in downtown San Jose is poised to become the location of the first of the housing and data center projects, Andrew Jacobson, vice president of the U.S. for Westbank, said in an interview with this news organization on Wednesday.
Westbank hopes to break ground by the end of the year on the Terraine Street housing and data center mixed-use development, according to Jacobson. A proposal is being circulated at San Jose City Hall.
“We are working closely with the city,” Jacobson said. “It needs the city’s approval.” Jacobson made the comments after a PG&E-hosted “Power Hour Breakfast” on Wednesday, part of a quarterly series of events organized by the San Jose Chamber of Commerce.
Canada-based Westbank and San Jose-based real estate executives Gary Dillabough, Jeff Arrillaga, Tony Arreola and Mark Lazzarini, acting through an alliance, own the property, which is near the lively San Pedro Square area.
Westbank envisions a 345-unit housing tower with an adjacent data center facility. Originally, Westbank had proposed the residential highrise and an office building, but the collapse of the office market prompted a shift to the data center.
“The data center would be in the same footprint as the office building,” Jacobson said.
The real estate alliance bought the property in 2021, paying $11.4 million for the choice site, which is next to State Route 87.
The Terraine Street project would represent a major milestone for Westbank and downtown San Jose.
The housing tower and data center project on Terraine Street would mark Westbank’s first ground-up development in downtown San Jose.
“The city of San Jose needs to expedite the development of this project,” said Bob Staedler, principal executive with Silicon Valley Synergy, a land-use consultancy. “The needed housing and revenue to the city makes it a win-win.”
Separately, Westbank is about to embark in earnest on a project to convert the Bank of Italy historic tower at 12 South First Street from offices to housing. The Bank of Italy project, however, involves an existing building.
The wide-ranging PG&E Power Breakfast included a presentation by Tevin Panchal, head of growth with Plug & Play Ventures, which is planning to establish an AI Center of Excellence in downtown San Jose.
The AI Center of Excellence, which is close to signing a lease in downtown San Jose, will have startups that it will finance and nurture, a learning center in an alliance with San Jose State University, and a physical space available to the public.
“Everyone can come look, touch, feel, the applications of AI,” Panchal said. “We are very excited about this.”
The learning space will be made available to students as early as the 7th and 8th grades, Panchal said.
“The new center in San Jose will boost the local economy by fostering innovation and talent in Silicon Valley,” Plug & Play Ventures states on its website.
Advanced manufacturing, data and AI, cybersecurity, energy, health tech, and information technology will be the primary areas of interest at Plug & Play’s AI Center of Excellence in San Jose, according to the website.
Oakland-based PG&E is greatly widening its efforts to accommodate anticipated growth in San Jose and the South Bay, which could be the site of a boom in data centers and housing.
“We are preparing for rapid economic expansion, particularly in tech and AI in San Jose,” Teresa Alvarado, PG&E vice president for the utility’s South Bay and Central Coast Region, said during a presentation for the gathering.
Westbank believes that developing housing next to data centers could be a huge catalyst for environmentally friendly housing projects by using excess heat from a data center to provide energy to nearby homes.
“Our long-term vision is with multiple data centers and housing clusters, the idea is to connect them all and create a downtown San Jose district energy system,” Jacobson said in an interview with this news organization in November 2024.