After years of permits, hearings, and paperwork, Microsoft has finally put shovels in the ground on its long-planned data center campus in Alviso, the northernmost corner of San Jose. The groundbreaking today turned a once quiet stretch of industrial land into an active construction site, with city and company officials spotlighting the campus’s planned use of recycled water and the local infrastructure upgrades that will come with it.
According to the Silicon Valley Business Journal, Mayor Matt Mahan attended the ceremony, where San Jose leaders praised Microsoft’s commitment to cooling the facility with recycled water. The event signaled the start of serious earth-moving work on the property that has been sitting in Microsoft’s hands for years.
What Microsoft Is Building
City planning records describe the Alviso project at 1657 Alviso-Milpitas Road as a two-building data center campus, with both structures single-story and totaling about 396,914 square feet. The complex is designed for a maximum electrical load of nearly 99 megawatts, with onsite backup generators and a substantial recycled-water system built into the plan.
Those details come from the city’s environmental addendum and related project filings, as outlined by the City of San José, which lays out how the project is expected to operate and how utility demands will be handled.
Land History And Local Tension
Industry records show Microsoft set itself up for this moment back in 2017, when it paid about $73.2 million for the roughly 64-acre Alviso parcel, a deal that put the future campus site firmly in the company’s portfolio. Data Center Frontier reported on the acquisition at the time.
The land has not been without controversy. Last year, the city cleared an encampment near the property to allow project access, a move that turned the site into a flashpoint for neighbors and advocates, according to Data Center Dynamics.
Why It Matters
The Alviso groundbreaking lands in the middle of a global rush to build data centers. Colliers’ 2026 marketplace analysis reports that worldwide data-center spending reached roughly $580 billion in 2025, a surge largely driven by demand for AI workloads and cloud growth. That same surge has also sharpened questions about how much power and water these facilities use.
Colliers warns that the regions most likely to win the next wave of projects will be the ones that can lock in reliable electricity and utility connections. San Jose’s emphasis on recycled water for Microsoft’s Alviso campus fits squarely into that playbook, as reflected in the city’s planning and water-service documents.
Permits And Next Steps
The project is moving forward under a California Energy Commission docket, with the City of San José acting as the responsible agency for environmental review. Before the data halls can start humming, key infrastructure still has to be built, including recycled-water pipelines and critical electrical substation connections.
Project documents and the water supply assessment are publicly available through city and state filings. The docket at the California Energy Commission includes engineering and water-supply details that will shape how the construction and eventual operations are overseen.
