Microsoft Buys ~22-Acre Development Site in San Jose for $78.7MM

Microsoft, LBA Realty, Lumileds, Northtown, San Jose, 227 Industrial Center,
A graphic depicting LBA's original holdings along Orchard Pkwy and Trimble Rd. Microsoft has purchased property LBA set aside for its "South Campus."

By Meghan Hall

Major tech companies are continuing to plan ahead, buying chunks of property that will accommodate their long-term goals. In a deal that closed just yesterday, Microsoft acquired a ~22-acre development site in San Jose for $78.7 million. The seller, according to industry sources, was LBA Realty.

Located off of Orchard Parkway, the property is only about one-third developed and has about 20 acres of open space. The property is adjacent to and just south of Lumileds’ world headquarters and abuts the Guadalupe River and affiliated river trail.

The acreage was intended to be part of a larger development that LBA Realty had planned as part of an expansion of the adjacent Lumileds’ facility. The acreage, called “South Campus,” was meant to be a mix of research and development, office, and industrial uses.

To the North, LBA has been pursuing the development of “Northtown,” located at 350 Trimble Rd. The site would include retail, restaurants and a 160,000 square foot, 250-key hotel.75,000 square feet of new office and research and development space, as well as new parking, are also planned. Across nearly 68 acres–including the acreage that Microsoft acquired–LBA had planned to construct nearly 1.28 million square feet of development. 

However, Microsoft is pursuing development not far away, at 227 Industrial Center. Microsoft purchased the 65-acre site in 2017 and paid $73.2 million for the property. According to public records on file with the City of San Jose, Microsoft is pursuing two development scenarios. In the first scheme, 1.2 million square feet of light industrial development would be constructed. In the second option, Microsoft could build a 436,880 square foot–or 49.5 megawatt–data center and power station. On the remaining acreage, 728,000 square feet of light industrial would be constructed.

Microsoft has also been working to build out its latest Silicon Valley campus in Mountain View. Designed by WRNS Studios, the 640,000 square foot campus is meant to demonstrate Microsoft’s “commitment to transform the Microsoft employee experience.” 

Microsoft’s plans for its new property are unclear. However, the company continues to grow. At the end of 2020, the company reported revenues of $43.1 billion, up 17 percent from 2019. Its profit also increased by 33 percent to $15.5 billion, far exceeding expectations and laying the ground work for expansion of the company’s real estate portfolio, as well.

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