Blackstart Digital to buy IBM's Almaden campus for data center conversion

Blackstart Digital is buying the former IBM Almaden Research Center at 650 Harry Road in San Jose — seven buildings across 35 acres, with a substation rated at 25MW — in a deal that Data Center Dynamics, citing the Mercury News, reports could close before the end of the year. Terms were not shared, and by the report's telling the sale has not closed.

The electrical service is what makes this a data center trade. The campus runs to more than 500,000 square feet, already hosts some data center space, and is served by that 25MW substation, which Blackstart is aiming to expand; the company says it also plans to leave more than 500 acres of open space undeveloped. The result, if it works, is added megawatts on an existing footprint instead of a greenfield entitlement, and the interconnection is where such growth is likeliest to stall.

A research park comes with what raw land lacks — a grid connection, a utility relationship, a planning file — so in markets where those things gate development, the question is how much capacity can be coaxed out of buildings that already exist, and conversion work is likely the shorter path to megawatts.

IBM put Almaden on the market after deciding last year to move staff to its Silicon Valley Lab at 555 Bailey Road, also in San Jose. That decision turned a working laboratory into a parcel, and the parcel carries an unusual record: the campus opened in 1986, and the work done there includes the first inkjet printer prototype, the relational database, DVD and Blu-ray encryption and IBM's TrueNorth chip. The pricing inputs are the zoning, the substation and 500,000 square feet of buildings a tenant could refit.

The report does not say what occupies the data center space the campus already has, how large it is, or who runs it — details that would tell a reader how much of the 25MW is spoken for. That substation is also the number any expansion has to beat, and the report puts no target on where Blackstart wants to land.

In August, the San Jose City Council voted to rezone the campus as an industrial park zoning district, the step that put data center development in play, though the designation is industrial rather than data-center-specific and so build details are likely to be settled in the environmental review rather than the zoning language. City staff had disclosed that multiple real estate executives had spoken with San Jose planners before the vote, and the Sierra Club opposed the rezoning over the data center possibility; the entitlement is the asset, as our coverage of PGIM's Munich exit put it, and Almaden's arrived in August, weeks before the acquisition was reported. The environmental review Blackstart has filed for its renovations is the next gate, and the report gives no outcome for it.

Little is known about the buyer. Blackstart is California-based and was co-founded last year by Chadwick Manning, whose background the report describes as leading several renewable energy and power firms. The report, citing LinkedIn, lists other executives including alumni of Digital Realty and Deutsche Telekom along with people from other firms linked to Manning; Arman Khalili, founder of Element Critical/Evocative and CEO of Foundation DC, is listed as a partner. That mix of power development and large-operator experience suggests a team built for the powered-shell business, where the developer brings land, interconnection and a building and the tenant brings the fit-out.

Whether that team can finance the conversion depends on a customer the report does not identify. The capital stack prices the customer: assets anchored by a hyperscaler or an AI lab get infrastructure treatment, while tenantless development has to be underwritten as something else. Almaden is not tenantless in the literal sense — the campus already runs some data center space — but no customer is named for the expansion, which is likely the first question a lender or joint-venture partner asks before substation work is funded. Nor does the report describe the transaction's structure, its financing, or a timetable beyond the possible close before year end.

A close before the end of the year would give Blackstart an entitled, energized campus in San Jose for an undisclosed price, with an environmental review filed and no tenant named. The megawatts the utility will allow and the customer who pays for them are the two facts that would turn the conversion from an option into a supply story.