San Jose Developers Proposed Two Massive Data Centers
Prologis and Menlo Digital have outlined plans for sites that would consume 99 megawatts of power each in South San Jose.
Updated on Oct. 2, 2026 in Data Centers
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Developers Prologis and Menlo Digital presented plans for two large-scale data center projects in South San Jose during a recent town hall meeting. Both firms committed to conducting environmental reviews for their respective sites ahead of new citywide standards.
Why it matters
As data center power requirements reach industrial scales, San Jose is balancing this expansion against local environmental impact and public concern. The city is currently drafting regulations to govern future infrastructure development.
The proposed Menlo Digital facility spans 444,400 square feet, while the Prologis site at 5977 Silver Creek Valley Road measures 516,000 square feet. Each site requires 99 megawatts of power, with the Menlo project utilizing an air-cooled closed loop system to minimize water consumption.
The players
Prologis
A logistics real estate investment trust currently expanding its footprint into high-capacity data center development.
Menlo Digital
A data center developer focused on large-scale infrastructure projects requiring significant power and cooling capacity.
PG&E
The regional utility provider managing electrical grid capacity and infrastructure cost structures for Northern California.
Gavin Newsom
The Governor of California who signed legislation mandating environmental review processes for data center projects.
The details
The facilities are designed to draw significant power from the regional grid, necessitating upfront infrastructure cost collections through PG&E to protect ratepayers from price hikes. To address resource intensity, the Menlo Digital site uses an air-cooled closed loop system—a cooling process that recirculates treated water through a sealed pipe network to reject heat without evaporative loss. These proposals arrive as the city prepares to finalize mandatory data center environmental standards by late 2026.
Timeline
September 21, 2026: Gov. Gavin Newsom signed legislation requiring data center environmental reviews.
September 29, 2026: Developers presented facility plans at a District 2 town hall meeting.
End of 2026: San Jose expects to finalize new citywide data center standards.
The Tech Race
These projects reflect the accelerating competition for industrial power capacity in the Bay Area. The developments must now reconcile their power requirements with the state's new regulatory framework for data center oversight.
Residents may see changes in the local power infrastructure landscape as developers begin building large-scale cooling systems. While PG&E suggests that high-capacity data centers could potentially lower customer rates by 1%, the actual effect on local utility bills remains subject to grid load outcomes.
The takeaway
Developers are moving to align their South San Jose projects with incoming environmental mandates before the city finalizes its regulatory standards. Residents should monitor the city council's legislative calendar for the official publication of the new environmental requirements by year-end.
What happens next
San Jose officials are scheduled to finalize new citywide environmental standards for data center projects by the end of 2026.
Further reading
For more on how the region is managing infrastructure scaling, see our Data Centers coverage.
Source note: This article includes information reported by San José Spotlight.
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