SAN JOSE >> A housing tower and data center project in downtown San Jose may become a reality by year’s end in a push to transform the city.

PG&E, developer Westbank and 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 is planning multiple housing projects at downtown sites that would be built next to data centers. The developer believes that having housing next to data centers could be a huge catalyst for environmentally friendly projects by using excess heat 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,” Andrew Jacobson, vice president of the U.S. for Westbank, said in an interview with this news organization in November 2024.

A vacant lot at 323 Terraine St. is poised to become the location of the first implementation of this idea, Jacobson said in an interview with this news organization on Wednesday.

Westbank hopes to break ground by the end of the year on the 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 after a PG&E-hosted “Power Hour Breakfast” on Wednesday. “It needs the city’s approval.”

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 San Pedro Square.

Westbank envisions a 345-unit housing tower with an adjacent data center facility. Originally, it had proposed a residential highrise and an office building. The real estate alliance bought the property in 2021 for $11.4 million.

“The data center would be in the same footprint as the office building,” Jacobson said.

The Terraine Street project would be 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 land-use consultancy Silicon Valley Synergy. “The needed housing and revenue to the city makes it a win-win.”

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 Wednesday.

Separately, Westbank is about to embark in earnest on a project to convert the Bank of Italy historic tower at 12 South First St. from offices to housing. The Bank of Italy project, however, involves an existing building.

The wide-ranging PG&E Power Breakfast, part of a quarterly series of events organized by the San Jose Chamber of Commerce, included a presentation by Tevin Panchal, head of growth with Plug & Play Ventures. The company 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 at a site totaling about 3,000 to 5,000 square feet, will have startups that it will finance and nurture. It also will include a learning center in an alliance with San Jose State University and a physical space that will be 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.

Panchal hopes that pitches from startups could begin in early April. By sometime in mid- to late April, the “first cohorts” could start to move into the new AI hub, Panchal said.

Advanced manufacturing, data and AI, cybersecurity, energy, health tech, and information technology will be the primary areas of interest at the AI Center of Excellence, according to Plug & Play Ventures.